Saudi Aramco ‘explores supply cuts to meet OPEC target’

Saudi Aramco is reportedly approaching all its customers for possible cuts from February.
Updated 06 January 2017

Saudi Aramco ‘explores supply cuts to meet OPEC target’

LONDON: Saudi Aramco has started talks with customers globally to discuss possible cuts of 3 percent to 7 percent in February crude loadings as it moves to implement an agreement on curbing global oil output, sources said on Thursday.
The Organization of the Petroleum Exporting Countries (OPEC) agreed in late November to cut production in the first half of 2017 to reduce global oversupply and prop up prices.
“Aramco is approaching all its customers for possible cuts from February and discussing likely (supply) scenarios,” one of the sources said. “Nothing is confirmed yet,” he said, adding that the scenarios were for 3 percent to 7 percent cuts.
Aramco did not immediately comment.
Under the deal, Saudi Arabia agreed to cut output by 486,000 barrels per day (bpd), or 4.61 percent of its October production of 10.544 million bpd.
Energy, Industries and Mineral Resources Minister Khalid Al-Falih said last month that January oil production could fall below the Kingdom’s agreed ceiling.
“We have done a very high reduction to Saudi Aramco’s customers in Europe and the US, and some customers in Asia, which will bring the Kingdom’s production below the agreed upon ceiling,” he said.
Saudi Aramco will be receiving nominations for February crude supplies from its customers and is assessing which grades it could cut, a second source said.
Saudi oil buyers will be notified by Jan. 10 of their respective crude allocations for February.
“Saudi Arabia, out of OPEC (members), is the country where we should expect the most compliance (to the OPEC agreement). In a sense, it is a confirmation that they are doing what they said they will do,” Petromatrix oil strategist Olivier Jakob said.
Saudi Arabia’s crude output fell from a revised 10.60 million bpd in November to 10.45 million bpd in December, according to a Reuters survey of OPEC production.
“Exports are down markedly from a massive November number,” said one source who tracks Saudi output.
“The bottom line is December is down from November with regard to supply to market.”
Aramco raised the official selling price (OSP) for most of the crude grades it sells to Asia and the US, but cut prices to Europe.
The price of Arab Light crude for Asian customers rose by $0.60 a barrel compared with January to $0.15 a barrel below the Oman/Dubai average.
Traders in Asia said the price hikes were slightly more than expected, and coming on the back of supply cuts in February.


Gulf Marine CEO quits after review sparks profit warning

Updated 28 min 36 sec ago

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.