Page 11 - AfrOil Week 29 2021

AfrOil POLICY AfrOil

Algeria and Nigeria has expressed some displeasure with the new plan (Photo: Wikimedia)

OPEC+ members reach agreement

OIL MARKETS THE OPEC+ group this week reached an agree- potential banana skin of a wholesale push to lift
ment that will result in increased oil production baseline production levels.
as five members saw their baseline output levels In May, the reference levels of the group’s two
raised after tense negotiations. top producers, Saudi and Russia, will increase
Under the agreement, the members will col- by 500,000 bpd to 11.5mn bpd, with the UAE’s
lectively ease their production cuts by 400,000 rising by 332,000 bpd to 3.5mn bpd as Iraq
barrels per day (bpd) each month from August and Kuwait also receive uplifts of 150,000 bpd
and push back the current April 2022 end date each, taking their baselines to 4.803mn bpd and
until the end of that year. 2.959mn bpd respectively.
At this rate, it will take nearly 15 months for
OPEC+ to increase production by the 5.8mn Rhetoric
bpd it is still withholding under the agreement For the UAE, the baseline production level is of
reached in early 2020 as they scrambled to bal- great relevance. Its current 3.168mn-bpd level is
ance the market. based on October 2018 output, but Abu Dhabi
Speaking to Russia 24, Russia’s energy min- in particular has invested heavily in expanding
ister Alexander Novak said: “Today we made a capacity, which now stands at 4mn bpd.
decision for the market to restore production to The country’s officials have complained
a pre-crisis level.” about the shut in of a disproportionate level of
Meanwhile, from May 2022, the baseline output – 35% – compared to other members –
production levels of the group’s five largest 25% on average.
producers will rise by a combined 1.632mn Abu Dhabi National Oil Co. (ADNOC) has
bpd. The group’s next meeting is scheduled for embarked on a $122bn four-year programme
September 1 with a thorough review of the deal which is designed to help it raise output capac-
planned for December. ity to 5mn bpd by 2030, with the company this
The news marks a significant compromise week announcing more than $760mn in con-
following a breakdown in talks two weeks ago tract awards to achieve this.
as Saudi Arabia and the UAE dug their heels in. Meanwhile, for Riyadh, the heightened ten-
Riyadh had been pushing for the monthly pro- sion is more based in reputation and control.
duction increases to be tied to a commitment to Saudi Arabia’s baseline of 11mn bpd has little
extend the existing supply cut, while the Emir- bearing in reality – the Kingdom has exceeded
ates had sought an upward revision of its refer- this level only twice in history – in November
ence point for cuts before it would agree to any 2018 and April 2020, when it hit 12.1mn bpd as
extension. it launched a price war with Moscow, sending
This week’s deal sees both parties get what prices into freefall. In October 2018, it was run-
they wanted while apparently avoiding the ning at 10.77mn bpd.

Week 29 21•July•2021 www. NEWSBASE .com P11