OPEC'S STRATEGY: $70 - $80
OPEC's Saudi-led strategy to defend market share and force rival producers out of business is yielding results, according to Algeria's former oil minister, Chakib Khelil.
Khelil expects prices to increase to $70 to $80 a barrel or more after oil majors abandoned or shelved projects. Still, that rebound risks reviving U.S. shale drillers, said the two-time president of OPEC.
"This strategy is working today since the market is stabilizing," Khelil said in an interview in Algiers. "But we must now take into account the competition from U.S. and Canadian production comes from shale oil."
Khelil's return to Algiers in March, after fleeing to the U.S. three years ago amid a corruption scandal, has raised speculation he will take on a leadership role in the North African nation's energy industry, or even succeed ailing President Abdelaziz Bouteflika. Talk of a succession battle has swirled through Algiers in recent months as the oil producer attempts to diversify an economy hit by slumping crude revenues and surrounded by Islamist unrest in neighboring Libya, Mali and Tunisia. Khelil said he's ready to help his country in any capacity, if asked.
While backing Saudi Arabia's policy, Khelil said the failure to reach a deal on freezing output last month in Doha represented a politicization of the Organization of Petroleum Exporting Countries not seen since 1973 when Arab producers imposed an embargo that triggered an oil crisis. Algeria itself has consistently opposed the OPEC's Saudi-led strategy.
"We hope that OPEC will come back in the future to its mission and really play its role as defender of the member countries, especially taking into account the competition from American oil," he said.
Khelil, who served as OPEC president in 2001 and again in 2008, said he hoped the political changes in Saudi Arabia wouldn't lead to lasting politicization of the bloc. The kingdom has given up its role as the global "swing producer," he said, with U.S. output now having the key impact on price trends.
Yet, even U.S. production won't be enough to satisfy increasing demand, according to Khelil. "In the coming three years, we really risk a supply crisis in the market," he said.
During a near-decade-long stint as oil minister, Khelil expanded gas shipments to Europe and attempted to lure foreign investment by limiting Sonatrach's share in upstream ventures. That law was overturned in 2005 as resources were nationalized. Algeria should consider offering majority stakes in minor fields, while increased investment and new technology would boost production by at least 10 percent, he said.
Algeria should also consider exploring overseas, he said.
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REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.