U.S. oil firms tell OPEC their growth will slow

By Dmitry Zhdannikov DAVOS, Switzerland (Reuters) - U.S. oil producers sought on Wednesday to soothe OPEC's worries about losing market share, telling the group that investors in the U.S. firms wanted a reduction in growth and higher payouts

Reuters January 24, 2019 01:05:46 IST
U.S. oil firms tell OPEC their growth will slow

US oil firms tell OPEC their growth will slow

By Dmitry Zhdannikov

DAVOS, Switzerland (Reuters) - U.S. oil producers sought on Wednesday to soothe OPEC's worries about losing market share, telling the group that investors in the U.S. firms wanted a reduction in growth and higher payouts.

The Organization of the Petroleum Exporting Countries and non-OPEC allies such as Russia have cut output since 2017 to support oil prices, while watching producers in the United States, which is not party to the cuts, drive up production.

The United States has overtaken Russia and Saudi Arabia to become the world's biggest crude producer. Output is approaching 12 million barrels per day (bpd).

OPEC's forecasts and even U.S. government predictions have repeatedly underestimated U.S. output growth.

The bosses of U.S. firms Occidental Petroleum and Hess Corp, attending a session at the World Economic Forum in Davos, said that growth of U.S. shale oil output would slow.

The session was a rare occasion when U.S. producers and an OPEC representative, OPEC Secretary-General Mohammed Barkindo, sat on the same panel.

"I believe not as much money will be pouring into the Permian basin this time. I believe investors will hold companies accountable for returns and a lot of this didn't happen previously," Occidental Chief Executive Vicki Hollub said.

Echoing her comments, Hess Corp founder and Chief Executive John Hess said shale production now accounted for about 6 percent of global production. "It will probably go up to 10 percent by mid-decade but then it flattens out," he said.

But he added that U.S. resources would start to degrade. "Shale is not the next Saudi Arabia. It is an important short-cycle component," he said.

U.S. President Donald Trump has repeatedly criticised OPEC for manipulating prices and demanded several times last year that the group bring them down. He has also praised OPEC, and its de facto leader Saudi Arabia, when prices have fallen.

Oil prices surged above $86 a barrel in October, but have since slipped back. On Wednesday, Brent was about $62.

Barkindo said OPEC aimed to balance supply and demand and had helped the United States by rescuing its oil industry from ultra-low oil prices.

"The oil industry is under siege globally," Barkindo said, adding that OPEC wanted to talk more regularly to U.S. producers to understand their industry better even if they could not participate in any OPEC-led production cuts.

In response, Hess said: "OPEC plays a very important role in stabilising the market and those efforts need to be recognised."

Fatih Birol, the head of the International Energy Agency, which represents industrialised nations, said most forecasts were still underestimating U.S. oil production growth.

"There is a huge potential in the U.S.," Birol told Reuters, adding that the United States could raise output by another 10 million bpd in the next decade.

(Reporting by Dmitry Zhdannikov; Editing by Edmund Blair)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.