Page 8 - NorthAmOil Week 02 2021

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MEOG: Saudi takes charge as Iran contin- 14. This is partly the result of OPEC and its allies
ues output push reaching an agreement last week that will see an
Saudi Arabia has signalled to the oil market that overall production cut extended until April, led
it does not need consensus from its OPEC part- by Saudi Arabia even as some other members of
ners to make major moves, while its regional the group raise their output.
nemesis Iran continues to award contracts in But US shale drillers – which have become
pursuit of higher oil production. known for their ability to respond quickly to
The Kingdom’s energy minister, Prince oil price fluctuations, are treating the rally with
Abdulaziz bin Salman, apparently took every- caution. Indeed, a handful of shale company
one by surprise when he announced a 1mn bpd CEOs have pledged restraint over the past few
production cut for February and March follow- days, including the heads of Devon Energy, Pio-
ing Russia and Kazakhstan being given room to neer Natural Resources, Occidental Petroleum,
make small increases. Cimarex Energy and Ovintiv. (See: Shale drillers While Saudi
While Saudi output will be reduced to urge restraint, page 9)
8.119mn bpd, Iran has continued announcing Occidental’s president and CEO, Vicki Hol- output will
contract awards to local firms as the Islamic lub, has said her company’s focus is currently
Republic seeks to raise its own production by on debt reduction – unsurprisingly given the be reduced
around 355,000 bpd, and has committed nearly company’s high debt load following its acquisi-
$3bn to the endeavour. The latest set of contract tion of Anadarko Petroleum for $38bn in 2019. to 8.119mn
awards are for mainly smaller fields, having pre- Devon, which just completed its acquisition of bpd, Iran has
viously focused on larger assets. WPX Energy, is aiming to keep production flat
Meanwhile, Tehran is anticipating comple- compared with levels it achieved in the fourth continued
tion to be reached shortly on the first devel- quarter of 2020. And Ovintiv’s CEO, Doug Sut-
opment phase of the Azar oilfield, allowing tles, described flat production as being “the new announcing
production from the field to expand to 65,000 growth” during a virtual conference hosted by
bpd. The project has been stuck at 97% since Goldman Sachs last week, calling for the shale contract awards
October, with a cumulative total of more than industry to show discipline. to local firms.
$1.7bn having been spent so far. This was echoed by Cimarex’s CEO, Thomas
To the west, neighbouring Iraq is in talks with Jorden, who said during the Goldman Sachs
Jordan over the renewal of their crude supply event that his company would be “highly disci-
agreement that was signed in February 2019, plined in setting a budget”.
providing for the export of 10,000 bpd of oil Pioneer, for its part, is maintaining its initial
to be trucked from Iraq’s Baiji refinery into the production growth target of just 5%, unchanged
Hashemite kingdom. despite Saudi Arabia’s production cut.
“I never anticipate growing above 5%
If you’d like to read more about the key events under any conditions,” Sheffield said during
shaping the Middle East’s oil and gas sector then the Goldman Sachs event. “Even if oil went to
please click here for NewsBase’s MEOG Monitor . $100 a barrel and the world was short of sup-
ply,” he said, the economics would not support
North America: Shale drillers proceed with adding rigs because service costs would cut
caution into margins.
Oil prices have rallied, reaching levels not seen Given the ongoing wave of shale industry
since February 2020, with West Texas Interme- consolidation, there are fewer companies left to
diate trading above $53 per barrel as of January buck the trend in any meaningful way.™

P8 www. NEWSBASE .com Week 02 14•January•2021