By Ernest Scheyder
VIENNA (Reuters) - OPEC should boost daily output by roughly 1 million barrels over time to keep global crude supply and demand in balance as production dips elsewhere, a leading U.S. shale executive said on Wednesday.
U.S. shale producers and the Organization of the Petroleum Exporting Countries have started talking after years of acrimony, conscious that a balanced market is in their mutual interest.
With oil production dipping in Iran, Libya and Venezuela, and growth in the Permian shale Basin of West Texas and New Mexico crimped by pipeline capacity restraints, the 14-member group should step in, Scott Sheffield, executive chairman of Pioneer Natural Resource Co told Reuters.
"OPEC needs to fulfil its duty," Sheffield said on the sidelines of the OPEC International Seminar, where he was a panelist.
"They need to put together some kind of deal to phase into the market. None of us want $80 (per barrel) to $100 oil, that's too high. There's a sweet spot between $60 and $80," he added.
Brent crude prices sat at roughly $75 per barrel on Wednesday.
Sheffield will not be part of OPEC's production negotiations on Friday, but his comments are likely to play into the group's discussions.
Iran signalled on Wednesday it could compromise on a small increase in OPEC oil output when the group meets this week, as Saudi Arabia scrambled to convince fellow members on the need for a larger rise in production.
Nigerian Oil Minister Emmanuel Ibe Kachikwu said in a brief interview that Sheffield's comments were "helpful but also alarming."
"The concern shouldn't be tightness in the market. That's a very short-term issue. It could be followed by a surplus in the market over the next 10 years," Kachikwu said.
Kachikwu's concerns were echoed by Total SA Chief Executive Patrick Pouyanne, who warned that pipeline constraints crimping supply in the shale industry are a short-term concern that will be fixed as new pipes are built.
"The shale oil is not there because you have some bottlenecks on the infrastructure but it will come end of next year. Don't forget it, it will come," said Pouyanne, also a seminar panelist. France-based Total does not operate U.S. shale wells.
Pioneer itself has enough pipeline capacity for all of its Permian production. The company is rapidly boosting output, pumping 312,000 barrels of oil equivalent per day (boed) with plans to pump 1 million boed by 2026.
"I think the U.S. has great potential to increase its production," said Bob Dudley, CEO of United Kingdom-based BP Plc, which operates shale wells across the United States. "It does so without a central plan. It responds to the market."
That Sheffield even came to the OPEC event surprised some market observers. U.S. antitrust law prohibits U.S. producers from making any output agreement or from working with OPEC members.
Sheffield and Hess Corp Chief Executive John Hess were the only U.S. shale executives to attend after three of their shale peers pulled out.
(Additional reporting by Shadia Nasralla; Editing by Elaine Hardcastle)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: Jun 21, 2018 00:06:29 IST