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Opec output deal to last 6-12 months: Barkindo

18 Oct 2016 14:59 (+01:00 GMT)
Opec output deal to last 6-12 months: Barkindo

London, 18 October (Argus) — A deal to constrain Opec production would last six to 12 months but members want to forge a long-term framework for co-operation with non-Opec producers, Opec secretary-general Mohammad Barkindo said today.

He said invitations to non-Opec producers to meet with Opec member representatives in Vienna on 29 October are being issued today, but he declined to specify which countries are being invited or the seniority of member country delegations. The meeting will come one day after a technical committee of Opec members meets to try to hammer out the length, basis, and distribution of constraints on members output with the aim of reducing production to 32.5mn-33mn b/d, a range that has itself to be narrowed.

But Barkindo did say that Russian oil minister Alexander Novak said Moscow will send a high level delegation. Barkindo also said he will meet with Novak on 24 October as part of ongoing Opec dialogue with Russia.

Discussing the meeting of Opec members in Algiers last month, where the proposal to limit output was agreed, Barkindo said the intention is to drive down stocks at least to five-year averages to rebalance the market. He said the agreement was not driven by prices but by fundamentals. Opec embarked on a process of rebalancing the market after the crash of 2014 — when it adopted a strategy of pursuing market share rather than prices — he said. When the price crash happened, Opec members did not expect the market imbalance to last so long. A quick correction and rebalancing had been expected.

By convention, Opec members use an aggregation of secondary source data as the basis for discussion of production and production restraints. But their use is a "a work in progress", he said, adding that several member countries have found their use problematic. "There is a need for timely and transparent data," said Barkindo. He said Opec's adoption of six secondary sources and averaging their numbers "has worked well".

Argus is one of Opec's secondary sources.