Page 11 - FSUOGM Week 25

FSUOGM NRG FSUOGM

OPEC+ aftermath is compelling at least some US producers to start
The aftermath of the OPEC+ meeting to agree restoring some of the output they have curtailed
oil production cuts beyond the end of June is still since March.
playing out. Analysts are estimating that up to 500,000
Having reached agreement, OPEC has bpd of US shale production – around a quarter
now moved to ensure that countries match of what has been shut in since the downturn
their promises and has levied additional cuts started – could return to the market by the end
on countries who failed to meet their quotas of June.
in May. High on this list are Iraq, Kazakhstan, “With prices where they are now, if they
Nigeria and Angola; the first two countries are stay above $30 [per barrel], I wouldn’t expect
said to have come up with agreed proposals; any significant curtailments from us in Q3 or
the remainder were due to commit by Monday. beyond,” Devon Energy’s CEO, David Hager,
A full report on the outcome of these talks is said at a JP Morgan energy conference last
anticipated soon. week.
One country that has moved to respond to However, oil prices of around $40 per barrel
the effects of the oil price collapse is Saudi Ara- are anticipated to continue acting as a brake on
bia, whose oil giant Aramco is planning major new drilling, even as some existing production
staff cuts and is pulling back on developing is restored.
its oil and gas deposits. These moves follow a Continental Resources is also among the
drastic fall in revenue, which has hit its balance companies saying that it will start to restore
sheet, and the pullback marks a rare pause in some of its output in response to current crude
Aramco’s efforts to drill wells, discover fields prices. The company said it expected to bring
and expand known deposits to replace the back around 20% of its shut-in production in
barrels being pumped from its conventional July.
oil reserves. The return of production is not limited to
After last week’s positive talk about Yemen shale plays. ConocoPhillips – which has both
raising its crude oil production by 25%, mat- shale and conventional operations – has also
ters have come back down to earth with the said it is considering restoring some of its cur-
occupation of the island of Socotra by the tailed volumes, which account for about a third
Southern Transitional Council (STC), which of its production, over the next few months.
was supposed to be part of a power-sharing This includes a plan to restore 100,000 bpd of
agreement with the government. Small steps shut-in production in Alaska by July.
of progress are threatening to unravel. As US production is being restored, how-
ever, there are warnings that this could com-
If you’d like to read more about the key events shaping plicate global efforts, including those by the
the Middle East’s oil and gas sector then please click OPEC+ group, to stabilise crude prices by
here for NewsBase’s MEOG Monitor . restricting output.

US producers cautiously restoring output If you’d like to read more about the key events shaping
The relative stability of oil prices, with West the North American oil and gas sector then please click
Texas Intermediate (WTI) above $40 per barrel, here for NewsBase’s NorthAmOil Monitor .™

Week 25 24•June•2020 www. NEWSBASE .com P11