ABU DHABI, 16th June, 2020 (WAM) — The United Arab Emirates is fully committed to the OPEC+ deal and volunteered to cut more during June together with Saudi Arabia and Kuwait to expedite the global oil market recovery, UAE Minister of Energy and Industry said on Monday.
“The UAE is progressing its production capacity build-up project of the five million barrels per day by 2030” and “in April we reached a new milestone of 4.2 million barrels per day,” said Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy and Industry, while talking at a virtual fireside chat organised by Atlantic Council, a nonpartisan organisation in the US.
“UAE has a longer vision to build that spare capacity. We will utilise it when the market needs it without distorting the supply and demand balance as we are committed to the OPEC+ agreement” the minister emphasised.
Talking about his expectations regarding the demand recovery, Al Mazrouei said, “We are confident that things will go normal, and demand will be restored but the question is when and how long it will take. Whether it’s one or two years, we need to ask all producers, including US producers, to be patient in bringing supply back to keep the balance around the five years’ average.”
The minister said that the transition toward green forms of energy is progressing but conventional energy resources (Oil & Gas) will continue to be part of the overall energy equation. “We need to be realistic about the pace of that transition,” Minister Almazroui mentioned.
When asked about the need for additional investment and production capacity, he said that up until the pandemic broke out, there was at least a one million barrel of oil per day demand increase from the producers’ side.
“There was a disruption in the production of several prominent producers during the past ten years, leading to losing some of their production today,” he said.
“For example Venezuela, Libya and some other countries have lost their production because of sanctions or civil unrest. There is no guarantee that something is not going to happen and will not distort the order in oil production, therefore we need to continue investing and bringing new capacity,” Al Mazrouei explained.
In the US, there was a decline in production during the past three months, he pointed out. “When some companies stop production, we know that some of them may not come back or it will take them longer time to be back, therefore somebody else has to fill the gap.
“Otherwise we will have shock in prices. The last thing we want is such a shock in the economies [of oil producing countries]. As we move to recovery, we are in need for stability [in the oil markets] with reasonable and stable price for producers and consumers. The market decides the price based on market fundamental of supply and demand,” he explained.
“We need a stable price environment to encourage investors in the oil sector while keeping a balance in the inventories and storage around the five years average [in oil sector]. I think that is the environment we want to be in,” said the minister.
As WAM reported on 11th May, Al Mazrouei had announced that the UAE would extra voluntarily cut its oil output by 100,000 barrels per day in June in a bid to back Saudi Arabia’s and Kuwait efforts to rebalance the world oil market.
”While the UAE successfully achieved production of over four million barrels a day in early April, it has subsequently reduced its production in line with the OPEC+ agreement,” he said.
”In support of efforts led by the Kingdom of Saudi Arabia to further restore stability to energy markets, the UAE has committed to undertake an additional voluntary cut of 100,000 barrels per day in the month of June,” he had said.
WAM/ Ibrahim Shukralla