OPEC Meeting Could End Without Decision - Irony Note Added from OPEC Children's Book

Let's play an amusing game of Irony.

OPEC Meeting Could End Without Decision

"The latest remarks from Iran’s Oil Minister are not really encouraging. Bijan Zanganeh said, as quoted by Reuters, that “I don’t believe at this meeting we can reach agreement. OPEC is not the organization to receive instruction from President Trump ... OPEC is not part of the Department of Energy of the United States.”

The comment refers to President Trump’s tweets about OPEC artificially pushing prices higher and reports that he personally asked Saudi Arabia’s government to step in and replace soon-to-be-lost Iranian barrels with its own after sanctions kick in."

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Let's compare that with an excerpt from the OPEC Children's Book :

"The Organization of the Petroleum Exporting Countries (OPEC) is an  intergovernmental organization currently made up of twelve oil exporting countries that work together to coordinate their petroleum policies.

The Organization was formed in response to the activities and practices of seven large international oil companies (IOCs) known as the “Seven Sisters”. The activities of these IOCs were often detrimental to the growth and development of the oil-producing host countries, whose natural resources they exploited.

The first move towards the establishment of OPEC can be traced 
back to 1949, when Venezuela approached four other oil-producing developing countries—Iran, Iraq, Kuwait and Saudi Arabia—to suggest that they explore avenues for regular and closer cooperation on oil matters. 

But the main impetus for OPEC’s birth came a decade later, after the IOCs had decided to reduce the price of oil without first asking the governments. In response, several oil-producing countries decided to hold a meeting in Cairo, Egypt, in 1959. This was the First Arab Petroleum Congress. Iran and Venezuela were invited as observers. 

The meeting adopted a resolution asking IOCs to consult the governments of oil-producing countries before changing the posted price of oil. But the IOCs ignored the oil-producing countries. And in 
August 1960, they once again lowered the price of oil.
"

 

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@Tom Kirkman, music to your ears: https://www.platts.com/latest-news/oil/vienna/us-shale-driller-pioneer-asks-opec-to-open-taps-26977010

The chairman of Permian heavyweight Pioneer Natural Resources took the unusual step Wednesday of publicly asking OPEC to pump more oil, arguing the price range of $60-$80/b is best for the group's members and Texas shale drillers alike.

  • Sheffield says oil rose to $80/b too fast, calls for $60-$80/b
  • Texas bottleneck will shut in some Permian wells for a year
  • Most of surging US production will continue to be exported

Scott Sheffield argued that global supply risks are looming in Iran, Venezuela, Libya and even the Permian Basin, where he said production growth will stay flat from September 2018 to September 2019 as new pipelines are built to alleviate a bottleneck.

"If OPEC doesn't do something, I think we'll see $100/b oil-plus," Sheffield said at the OPEC International Seminar in Vienna. "$100 oil is not going to help OPEC, and it's not going to help us in West Texas. It will hurt demand and remove investment."

OPEC meets Friday in Vienna to decide on the future of its 1.8 million b/d production cut agreement with 10 non-OPEC partners, including Russia. Saudi Arabia and Russia appear aligned on raising quotas, but are facing opposition from Iran, Iraq and Venezuela.

"It's very important for OPEC to put more oil on the market," Sheffield said.

Sheffield said major global supply risks include 500,000 b/d of lost Iranian exports when US sanctions go back into force in November and 500,000 b/d in further drops from Venezuela's collapsing oil industry.

"OPEC does a great job of trying to balance the market," he said in an interview with S&P Global Platts on the sidelines of the conference. "So they need to balance the market. They need to not let it get out of hand.

"But if they add too much, too fast and it goes back to $40, they made a mistake," he added.

Sheffield predicted US oil production will surge to 15 million b/d within a decade despite the current Permian bottleneck.

"We'll have hiccups, we'll have pipeline constraints, we'll have people constraints, but I'm still very bullish on US supply growth," he said. "It will probably take six to seven years to get up to 15 million b/d." Sheffield said most of the surging light sweet crude output would continue to be exported, as Gulf Coast refiners are geared toward heavy crudes.

Other highlights from the interview, which has been edited for clarity:

Q: How much should OPEC increase output?

A: I want enough over time. Venezuela is going to decline monthly. Iran sanctions will occur on a monthly basis once [US sanctions] return in November. OPEC needs to come out with something that they're going to phase in as they see supply from Iran and Venezuela and Libya come off the market.

Q: What does OPEC need to know about shale?

A: Before they make a decision, they need to understand the Permian is not going to be able grow for 12 months. The Eagle Ford and the Bakken are growing very little. They're back up a little bit, but US supply for a year is not going to [grow much] because of pipeline constraints.

Q: Has the White House helped US shale drillers?

A: Lifting the export ban was the biggest help we got about three years ago from the Obama administration. That was the biggest event that happened for our industry.

Q: Did US President Trump make it harder for Saudi Arabia to increase production by tweeting that OPEC was to blame for high oil prices?

A: He knows there's a sweet spot. The price got too high, too fast, so I don't blame him for making his comments.

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Glad I am in this community of giants

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8 minutes ago, DanilKa said:

music to your ears: https://www.platts.com/latest-news/oil/vienna/us-shale-driller-pioneer-asks-opec-to-open-taps-26977010

The chairman of Permian heavyweight Pioneer Natural Resources took the unusual step Wednesday of publicly asking OPEC to pump more oil, arguing the price range of $60-$80/b is best for the group's members and Texas shale drillers alike.

... "If OPEC doesn't do something, I think we'll see $100/b oil-plus," Sheffield said at the OPEC International Seminar in Vienna. "$100 oil is not going to help OPEC, and it's not going to help us in West Texas. It will hurt demand and remove investment."

Pinch me, I must be dreaming !

Thanks @DanilKa I had not seen this; it should probably be spun off into its own separate thread.

Yes indeed, this news is music to my ears  : )

An amazing outburst of levelheadedness from the Chairman of Pioneer, Scott Sheffield. 

If anyone reading this knows Mr. Sheffield, please tell him I would like to acknowledge his remarks as remarkably sensible.

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Shale producers are walking on a tight rope.

If the price is too low they don't make benefits and indebtment increases.

If the price is too high it will affect the economy, substitution to other energy sources is accelerated and world economic growth slows reducing oil demand and plunging the oil price to new depths.

Both options could make the shale bubble burst.

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