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Saudi crude output rises to 10mn b/d

22 Mar 2015 23:31 GMT
Saudi crude output rises to 10mn b/d

Riyadh, 22 March (Argus) — Saudi Arabia's crude output has climbed to around 10mn b/d, the country's oil minister Ali Naimi revealed yesterday.

"The kingdom's production now is around 10mn b/d, and we are willing to meet any new requests from customers at any time," he said on the sidelines of a conference on petroleum journalism in Gulf Cooperation Council (GCC) member states,

The country's output rose to 10mn b/d in March, an oil industry official based in Riyadh told Argus, but gave no precise date. Saudi Arabia produced an average of 9.68mn b/d in February, according to Argus estimates.

Naimi and other senior officials are stepping back from the Saudi stance expressed explicitly late last year that Opec has refrained from cutting output despite a supply glut to defend market share against rising high-cost crude, particularly shale oil.

"We want to correct what is being said about our intention," Naimi told the conference. "We are not against anyone, and also, we are with everyone in supporting market stability and the balance between supply and demand," he added.

But he emphasised his opposition to an Opec cut if non-Opec producers do not also cut output to support prices. Referring to a meeting grouping Saudi Arabia and Venezuela with non-Opec Russia and Mexico on the eve of the 27 November Opec ministerial meeting in Vienna, Naimi said, "We tried, and we met, and we were not successful because some countries insisted that Opec alone should carry that burden. We reject that Opec should carry that responsibility because Opec's production today is 30pc of the market, and 70pc comes from outside Opec. Because it is a common interest, everyone should participate if we want to improve prices, because it is not right for one party to gain at the expense of the other."

Saudi Arabia "lost a lot" in the 1980s when it cut output from 10mn b/d to 3mn b/d, Naimi added, "We are not willing to repeat that."

Naimi added that he and other GCC oil ministers are optimistic about the oil market and prices, but gave no indication about when he thinks supply and demand will return to a state of balance.

"As for prices, it is the market that determines them. Prices that are unjustifiably high because of a statement by one person or another are harmful. But if prices rise to cover the cost of producing the marginal barrel, that is reasonable," said Naimi. "Every investor wants to cover his costs, and long-term costs and wants a reasonable profit. That is what we hope for."

Saudi Arabia is targeting long-term, rather than short-term market stability, said Saudi Arabia's representative to the Opec board of governors, Mohammad al-Madi. "Higher prices in the short term may not be in the interest of all producers. Prices of $100-$120/bl are difficult to achieve again because this will bring on all producers," he said in an implicit reference to producers of high-cost reserves such as shale oil and oil sands.

sk/rjd



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