Page 13 - AsiaElec Week 15

EurOil POLICY EurOil
Norway to decide soon on oil supply cut
NORWAY
Norway last imposed a cut on production in 2002.
NORWAY will announce soon whether to take OPEC’s lead and cut its production to support oil prices, its energy minister has told Reuters.
The biggest oil producer in Western Europe said last week it would consider scaling back its oil supply unilaterally if OPEC and its allies reached a deal on cuts. That deal was finalised on April 13, when the so-called OPEC+ group pledged to remove a combined 9.7mn barrels per day (bpd) from the market.
“The agreement among the OPEC+ producer nations is very positive,” Norwegian Energy Minister Tina Bru told Reuters on April 13, add- ing that Oslo would decide on its own potential cuts “in the near future.”
Bru described the deal as “an important con- tribution to help bring stability to the oil market over the coming year.”
OPEC+ has called on producers outside the group – namely the US, Canada, Brazil and Norway – to cut a further 5mn bpd from global supply. However, none of these countries have announced a firm commitment to do so.
Norwegian oil output averaged 1.75mn bpd in February, marking a 26% increase year on year, largely thanks to the launch of the Johan
Sverdrup oilfield last autumn. Equinor and its partners at the project recently said they would fast-track the field’s ramp-up to full capacity.
Norwegian production is competitive, with less than 2% coming from assets with oper- ating costs greater than $20 per barrels of oil equivalent (boe), according to a recent report by Aberdeen-based Westwood Energy. But the government’s concern is that the steep capital spending cuts implemented in response to low prices could jeopardise future production levels.
The oil market downturn and the wider coro- navirus (COVID-19) crisis have had an acute impact on the Norwegian economy, with the government in late March predicting that GDP would contract by 2% this year. The government also expects its 2020 fiscal balance to be weak- ened by NOK135.8bn ($12.8bn).
The last time Norway intentionally reduced its production to prop up prices was in 2002, when the government announced a target to lower national output by 150,000 bpd to 3.02mn bpd. The government ended the restrictions within half a year, after prices had sufficiently improved. ™
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