Kuwait sees risk of oil supply shortage in 2019 due to Venezuela crisis

The US and major EU nations have been putting pressure to oust Nicolas Maduro as president of Venezuela, which holds the largest proven oil reserves in the world. (AFP)
Updated 05 February 2019

Kuwait sees risk of oil supply shortage in 2019 due to Venezuela crisis

  • The Trump administration has imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA
  • OPEC, Russia and other non-OPEC producers agreed in December to reduce supply from January 1

KUWAIT: The head of state-run Kuwait Petroleum Corp, Hashem Hashem, said on Tuesday that global oil supply could be hit this year by big reductions in exports from Venezuela.
The Trump administration has imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA, aimed at severely curbing the OPEC member’s crude exports to the United States and at pressuring socialist President Nicolas Maduro to step down.
“One of the known risks of supply shortage in 2019 would include the continuing decline of Venezuelan crude oil production beyond current expectations,” Hashem told an industry conference in Kuwait.
“However, the wild card recently has been market perceptions of potential shortages mainly from geopolitical pressures that have caused supply disruptions in the past and therefore pose a real threat for 2019.”
Hashem also said that the threat of a US-China trade war and mixed messages from the United States on whether it would raise interest rates is causing volatility in the global equity markets and could increase oil price volatility this year.
OPEC, Russia and other non-OPEC producers — an alliance known as OPEC+ — agreed in December to reduce supply by 1.2 million barrels per day (bpd) from Jan. 1.
OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela.
Hashem said OPEC+ actions should help re-balance the oil markets this year but he also warned of the impact of underinvestment in the oil industry which could cause a supply crunch by 2025.
“OPEC and the non-OPEC producing countries ... have successfully provided stability to the market since 2017 and reduced volatility in oil prices. The resultant prices, are critical to stimulate investment and growth,” he said.


Russia vows cooperation with OPEC to keep oil market balanced

Updated 21 November 2019

Russia vows cooperation with OPEC to keep oil market balanced

  • Moscow not aiming to be world’s No.1 crude producer, Putin tells annual investment forum

MOSCOW: President Vladimir Putin said on Wednesday that Russia and the Organization of the Petroleum Exporting Countries (OPEC) have “a common goal” of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

OPEC meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

“Our (common with OPEC) goal is for the market to be balanced, acceptable for producers and consumers and the most important — and I want to underline this — predictable,” Putin told a forum on Wednesday.

In October, Russia cut its oil output to 11.23 million barrels per day (bpd) from 11.25 million bpd in September but it was still higher than a 11.17-11.18 million bpd cap set for Moscow under the existing global deal. Putin told the forum that Russia’s oil production was growing slightly despite the supply curbs deal but Moscow was not aiming to be the world’s No. 1 crude producer. Currently, the US is the world’s top oil producer.

“Russia has a serious impact on the global energy market but the most impact we achieve (is) when working along with other key producers,” he said. “There was a moment not that long ago when Russia was the world’s top oil producer — this is not our goal.”

Russia plans to produce between 556 million and 560 million tons of oil this year (11.17-11.25 million bpd), Energy Minister Alexander Novak said separately on Wednesday, depending on the volume of gas condensate produced during cold months.

Russia will aim to stick to its commitments under the deal in November, Novak told reporters.

Russia includes gas condensate — a side product also known as a “light oil” produced when companies extract natural gas — into its overall oil production statistics, which some other oil producing countries do not do.

As Russia is gradually increasing liquefied natural gas production (LNG), the share of gas condensate it is producing is also growing. Gas condensate now accounts for around 6 percent of Russian oil production.

Novak told reporters that in winter, Russia traditionally produces more gas condensate as it is launching new gas fields in the freezing temperatures.

“We believe that gas condensate should not be taken into account (of overall oil production statistics), as this is an absolutely different area related to gas production and gas supplies,” he said.

Three sources told Reuters on Tuesday that Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters next month, but could commit to extend existing curbs to support Saudi Arabia.

On Wednesday, Novak declined to say that Russia’s position would be at upcoming OPEC+ meeting. Reuters uses a conversion rate of 7.33 barrels per ton of oil.