Saudi Arabia set to extend oil cuts till June

DPR says 2020 marginal oilfield bid still on October 30, 2020 9:15 am by Asowata Omosuri Oilfields By Solomon Asowata Lagos, Oct. 30, 2020 (NAN) The Department of Petroleum Resources (DPR) says the bid round process for its 57 marginal oilfields in the country is still ongoing. Mr Paul Osu, Head, Public Affairs, DPR, told the News Agency of Nigeria (NAN) on Friday in Lagos that the bidding process has not been completed. “The 2020 marginal oilfield bid round process is still ongoing in line with our published timelines on DPR website and bid portal. “Over 600 companies have applied to be prequalified for the bid rounds which began on June 1. However, the DPR had put measures in place to ensure that the awardees would be credible investors with technical and financial capability. “The objective of the 2020 marginal field bid round was to deepen the participation of indigenous companies in the upstream segment of the industry and provide opportunities for technical and financial partnerships for investors.” According to Osu, the last time the country conducted marginal field bid rounds was in 2003 “with 16 of the fields now contributing two per cent to the national oil and gas reserves while bringing development to their host communities in the Niger Delta.” NAN reports that a marginal field is any field that has reserves booked and reported annually to the DPR and was unproductive for a period of over 10 years.

Saudi Arabia is reportedly ready to extend the current Organisation of Petroleum Exporting Countries plus, OEPC+, crude oil production cuts till June.

Saudi Arabia will also keep cutting 1 million bpd in oil output unilaterally, an unnamed source who spoke to Reuters said.

OPEC+ have struggled to eased oil production significantly since January when the collective output was increased by 500,000 bpd from 7.7 million bpd in December to 7.2 million bpd.

Considering the still weak global demand, OPEC+ decided in January to give Russia and Kazakhstan small increases for February and March, keeping overall production little changed.

Since then, the cartel has remained cautious with any production changes as exempt OPEC members Libya and Iran kept increasing their production rates while the pandemic situation in some key markets remained more dynamic than oil producers would have liked.

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With some European countries tightening movement restrictions further amid yet another spike in infections and the United States also reporting higher new infection rates despite accelerating vaccinations, uncertainty about when oil demand will rebound has heightened. This is likely the primary factor determining Saudi Arabia’s reported willingness to keep cutting at the present rate.

“They don’t see demand as yet strong enough and want to prevent prices from falling,” the Reuters source told the news agency.

On Monday, Reuters cited another unnamed source as saying that Russia, too, was willing to back a further extension of the current cuts, but it also wanted to secure approval for a moderate increase in its own production to respond to higher seasonal demand at home.

The OPEC+ joint ministerial committee is meeting tomorrow to discuss production levels and the market situation ahead of the oil ministers’ meeting on Friday. Even if the cartel ends up rolling over current cuts, prices may not be affected too much. According to some, traders have already priced in the roll-over.

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