April 11, 2018, by Alex Lawler and Nidhi Verma
NEW DELHI (Reuters) – OPEC oil producers and their partners are trying to work out a structure for their proposed long-term agreement on oil supplies, the energy minister for the United Arab Emirates said on Wednesday.
Suhail al-Mazroui also told Reuters on the sidelines of the International Energy Forum in India that the agreement may not include a provision on cutting or increasing oil output.
The Organization of the Petroleum Exporting Countries, Russia and several other non-OPEC producers began to cut supply in January 2017 in an effort to erase a global glut of crude that had built up since 2014.
OPEC and its partners have extended the pact until the end of 2018 and Saudi Crown Prince Mohammed bin Salman told Reuters last month that Riyadh and Russia were considering a deal to extend their alliance for years or even decades.
“We are now trying to put a structure, or a term sheet, or a charter around what is the scope of the group,” Mazroui, whose country holds the OPEC presidency this year, told Reuters.
The talks have raised the prospect that producers could extend tangible actions to prop up oil prices through supply cuts – or moderate them by pumping more – beyond this year’s expiry of the supply cut agreement.
But the minister, asked if the agreement would have such a provision, said it was not yet clear.
“No, we need to wait until we agree with everyone what is going to be the charter,” he said. “What form, what shape, we’re not ready to discuss that now.”
The minister reiterated that producers aimed to draft the agreement by the end of this year, adding that it wasn’t a target to do this at the next OPEC meeting in June.
“I don’t think June is the target. Before the end of the year that’s my hope.”
The OPEC-led deal has reduced excess supply and helped boost prices to above $70 a barrel, the highest since 2014. But Mazroui echoed other ministers, such as his Saudi counterpart, in saying investment in new supplies was too low.
“We will know what will be the good price when the market is balanced and we have enough investments,” he said. “We need to have more investments coming.”
Editing by Adrian Croft