Oman to build capacity despite production cuts
Oman, the largest non-OPEC producer of crude in the region, reiterated that despite softness in global crude prices and country’s commitment to reduce output to comply with an accord to support the prices, it will continue to expand capacity.
Addressing the annual media briefing H E Salim bin Nasser al Aufi, Undersecretary in the Ministry of Oil and Gas said, in 2016,the sultanate averaged 1mn barrels per day (BPD) for the first time in a full year, and going forward
“We have been a very strong advocate of OPEC cutting production to balance the market. We support any initiative that sustains and grows oil prices, even if that means extending the current agreement beyond six months. We won’t be blocking that, but we need to know the details and how long it will continue,” said H E Aufi.
In the last quarter of 2016, OPEC and non-OPEC members agreed to cut global crude production by around 1.8mn bpd to ease global gut and support prices. Oman have been advocating and supporting the move to support prices. As per the arrangement, Oman was required to slash daily production by 45,000 barrels for the first six months of this year.
Oman, which does not have much resources compared to its neighbours, has been working hard to increase production in the past few years, particularly through using enhanced oil recovery (EOR) methods.
After initial hiccups, the country over the last ten years not only arrested the decline in production but also managed to increase its production to a record level in 2016, when it averaged 1mn bpd for the whole year.
According to H E Aufi, despite softness in crude prices that forced many countries to cut exploration activities, Oman continues to invest heavily in exploration activities and will continue to do so. But due to its commitment to support oil prices, it has decided to temporarily suspended its plan to increase production but will continue to add capacity.
“In terms of its implication locally so far, message is very clear with production cut, but we will continue building stock level, if the restriction on production is lifted for whatever be the reason, we are more than ready to come back to a million barrels per day level,” said H E Aufi.
On Omani crude oil prices, H E Aufi said, The average price of Oman crude dropped by 29 per cent to US$40.14 per barrel in 2016. However, due to improvement in prices following the deal, the average prices so far this year have been trading above US$50 per barrel.