Page 12 - FSUOGM Week 02 2021

FSUOGM NRG FSUOGM

MEOG: Saudi takes charge as Iran contin- reaching an agreement last week that will see an
ues output push overall production cut extended until April, led
Saudi Arabia has signalled to the oil market that by Saudi Arabia even as some other members of
it does not need consensus from its OPEC part- the group raise their output.
ners to make major moves, while its regional But US shale drillers – which have become
nemesis Iran continues to award contracts in known for their ability to respond quickly to
pursuit of higher oil production. oil price fluctuations, are treating the rally with
The Kingdom’s energy minister, Prince caution. Indeed, a handful of shale company
Abdulaziz bin Salman, apparently took every- CEOs have pledged restraint over the past few
one by surprise when he announced a 1mn bpd days, including the heads of Devon Energy, Pio-
production cut for February and March follow- neer Natural Resources, Occidental Petroleum,
ing Russia and Kazakhstan being given room to Cimarex Energy and Ovintiv.
make small increases. Occidental’s president and CEO, Vicki Hol-
While Saudi output will be reduced to lub, has said her company’s focus is currently While Saudi
8.119mn bpd, Iran has continued announcing on debt reduction – unsurprisingly given the
contract awards to local firms as the Islamic company’s high debt load following its acquisi- output will
Republic seeks to raise its own production by tion of Anadarko Petroleum for $38bn in 2019.
around 355,000 bpd, and has committed nearly Devon, which just completed its acquisition of be reduced
$3bn to the endeavour. The latest set of contract WPX Energy, is aiming to keep production flat
awards are for mainly smaller fields, having pre- compared with levels it achieved in the fourth to 8.119mn
viously focused on larger assets. quarter of 2020. And Ovintiv’s CEO, Doug Sut- bpd, Iran has
Meanwhile, Tehran is anticipating comple- tles, described flat production as being “the new
tion to be reached shortly on the first devel- growth” during a virtual conference hosted by continued
opment phase of the Azar oilfield, allowing Goldman Sachs last week, calling for the shale
production from the field to expand to 65,000 industry to show discipline. announcing
bpd. The project has been stuck at 97% since This was echoed by Cimarex’s CEO, Thomas
October, with a cumulative total of more than Jorden, who said during the Goldman Sachs contract awards
$1.7bn having been spent so far. event that his company would be “highly disci- to local firms.
To the west, neighbouring Iraq is in talks with plined in setting a budget”.
Jordan over the renewal of their crude supply Pioneer, for its part, is maintaining its initial
agreement that was signed in February 2019, production growth target of just 5%, unchanged
providing for the export of 10,000 bpd of oil despite Saudi Arabia’s production cut.
to be trucked from Iraq’s Baiji refinery into the “I never anticipate growing above 5% under
Hashemite kingdom. any conditions,” Sheffield said during the Gold-
man Sachs event. “Even if oil went to $100 a bar-
If you’d like to read more about the key events rel and the world was short of supply,” he said,
shaping the Middle East’s oil and gas sector then the economics would not support adding rigs
please click here for NewsBase’s MEOG Monitor . because service costs would cut into margins.
Given the ongoing wave of shale industry
North America: Shale drillers proceed with consolidation, there are fewer companies left to
caution buck the trend in any meaningful way.
Oil prices have rallied, reaching levels not seen
since February 2020, with West Texas Interme- If you’d like to read more about the key events shaping
diate trading above $52 per barrel as of January the North American oil and gas sector then please click
12. This is partly the result of OPEC and its allies here for NewsBase’s NorthAmOil Monitor .™

P12 www. NEWSBASE .com Week 02 13•January•2021