Page 7 - AsianOil Week 09 2022

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OPEC+ sticks to its guns despite Ukraine war

POLICY THE OPEC+ group surprised nobody in the Paris-based International Energy Agency (IEA)
industry this week when it announced that it would release 60mn barrels from their strategic
would add 400,000 barrels per day (bpd) of petroleum reserves (SPRs), with half of that com-
combined oil production in April, as crude prices ing from the US. (See previous story) IEA Exec-
continued to defy gravity. utive Director Fatih Birol said: “The situation in
Following a meeting in Vienna on March energy markets is very serious and demands our
2, the group signed off on the now-custom- full attention. Global energy security is under
ary easing of quotas, though data showed that threat, putting the world economy at risk during
its January output was nearly 1mn bpd below a fragile stage of the recovery.”
target. However, the IEA’s efforts to reduce prices
The US has repeatedly asked OPEC kingpin failed to counter the geopolitical and supply
Saudi Arabia to increase production to bring security risk premium associated with the
prices lower, but Riyadh, and other members of ongoing conflict in Ukraine as ICE Brent crude
the group have been united in reiterating their futures hit a nine-year high of $113.94.
dedication to the 2020 deal that has stabilised Concerns about the OPEC+ group’s ability to
markets and bolstered prices. ramp up output were clearly a factor in the rise
Perhaps the clearest expression of the indus- with data from OPEC’s Joint Technical Com-
try’s perspective was given Bahrain’s Oil Minis- mittee showing that production in January had
ter HE Mohammed bin Khalifa bin Ahmed Al missed the 23-nation group’s 40.493mn bpd by
Khalifa during last week’s International Petro- 972,000 bpd.
leum Technology Conference (IPTC) in Riyadh. For the long-term sustainability of the deal,
He thanked Saudi Energy Minister and “captain members will be urged to redouble efforts to
of the ship” Prince Abdulaziz bin Salman Al Saud increase output, particularly in view of last
for his role in steering the oil industry away from year’s upward adjustment of the baseline for the
the “edge of the abyss”. OPEC+ quotas, which will unwind the restric-
With the OPEC+ position clear, this week tions by almost 1.6mn bpd when it comes into
started with the news that 31 members of the effect in May.™

CNPC wins first drilling contract

at Ecuador’s Ishpingo oilfield

PROJECTS & ECUADOR’S Energy Minister Juan Carlos onshore production platforms, a feat that could
COMPANIES Bermeo announced in late February that China raises output levels by 150,000 bpd.
National Petroleum Corp. (CNPC) had been In the meantime, Ecuador plans to continue
awarded its first drilling contract for the Ish- exporting a large portion of its crude through
pingo oilfield, located near the Yasuni National open-market tenders. This, together with the
Park. approval of a new hydrocarbon law, has enabled
“We have a lot of hope [for] the Ishpingo the South American country to move forward
field,” Bermeo said following the signing of the with auctions for gas and oil exploration projects
deal with CNPC. beyond the contract awarded to CNPC.
Prior to the agreement, the Chinese company In order to attract further interest from oil
had to secure an environmental licence for the companies, Ecuador has submitted legal reforms
sensitive area, which contains heavy crude oil. that will see the migration of existing oil service
During its first drilling campaign, CNPC will contracts to profit-sharing agreements; a pro-
sink 40 wells over a period of 18 months. posal that has garnered much interest from pro-
The CNPC contract is expected to contribute spective companies.
to Ecuador’s efforts to ramp up its national oil Another avenue that the government
production. The government has a production intends to take in order to assist in its produc-
target of 580,000 barrels per day of crude this tion increase is the relocation of the country’s
year, a significant increase from the 477,300 bpd most important pipelines, many of which have
produced in 2021. seen their operations interrupted multiple
Currently, the government is struggling to lift times because of landslides and adverse weather
a prohibition on the extension of the Ishpingo events. This $200mn project is still pending the
licence. Should it be successful in this endeavour, allocation of budget fund by the state-owned
CNPC will be able to install an additional seven company Petroecuador.™

Week 09 04•March•2022 www. NEWSBASE .com P7