Paris: An agreement to cut global oil production is possible, but would only happen if countries that do not belong to the Organization of the Petroleum Exporting Countries (Opec) also agree to cut output, Total’s chief executive said.
“It will only be possible if non-Opec countries including Russia also agree to cut (output), because Saudi Arabia will not shoulder the burden alone,” Patrick Pouyanne (pictured) told an energy forum in Paris.
Opec is due to meet on November 30 to coordinate an output cut agreed in Algiers in September, potentially with the cooperation of Russia, which is not a member of the group. Top Opec oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, Opec sources said, as it wants to focus on having consensus within the organisation first. The meeting was planned to discuss the contribution that producers outside the Opec will make to a proposed supply-limiting agreement.
Russia could revise down its 2017 oil production plans if a global output freeze pact comes into force, Russian Energy Minister Alexander Novak said on Thursday. “To be honest, the missing element is; In what way the election of Donald Trump (as president of the United States) is going to affect the dynamics within Opec?” Pouyanne said.
France’s Total signed a deal with Iran this month to further develop its part of the world’s largest gas field, becoming the first Western energy company to sign a major deal with Tehran since the lifting of international sanctions earlier this year following a nuclear deal.
“When I take a decision to sign an accord with Iran on the eve of the election of Donald Trump, I do that knowing that I’m potentially exposing about $1bn of the company’s funds to risks. But I do so knowing that in the $150bn that we manage, that risk is acceptable,” Pouyanne said, in a speech about energy and geopolitics. “But I also do so knowing that being the first oil major to sign a deal will open doors for the company to potentially benefit in a major market and our Iranian partners will appreciate it,” he said.
Trump has called last year’s deal ending a diplomatic standoff between Iran and six world powers over the country’s nuclear policy and opening the way for western investment “the worst deal ever negotiated,” although he has also conceded it would be hard to tear up a deal enshrined in a UN resolution.
International Energy Agency Director Fatih Birol told Reuters on Thursday that even if production is cut, higher prices could prompt US based shale oil drillers to massively increase their own output.
