Exit strategy of global cuts to be discussed before June

Saudi Arabian Energy Minister Khalid al-Falih, Russian Energy Minister Alexander Novak, Kuwaiti Oil Minister Essam al-Marzouq and OPEC Secretary General Mohammad Barkindo attend a meeting of the 4th OPEC-Non-OPEC Ministerial Monitoring Committee in St. Petersburg, Russia, in this July 24, 2017 photo. (REUTERS)
Updated 11 December 2017
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Exit strategy of global cuts to be discussed before June

KUWAIT: OPEC and other oil producers will study before June the possibility of an exit strategy from the global oil supply-cut agreement, Kuwait’s oil minister Essam Al-Marzouq said on Sunday.
“There are still meetings every couple of months for the ministerial monitoring committee, and there will be a study formed for the possibility of an exit strategy ... before June,” he told reporters.
Both OPEC and non-OPEC producers led by Russia have agreed to extend oil output cuts until the end of 2018 as they try to clear a global oil glut while signaling a possible early exit from the deal if the market overheats.
OPEC meets next in June, while the next meeting for the ministerial monitoring committee, known as the JMMC, is due to be held in January in Oman.
Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival US shale firms don’t boost output further.
Moscow needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude.
Russian Energy Minister Alexander Novak said on Wednesday that it was too early to talk about a possible exit from the global deal to cut oil production, and the eventual withdrawal from the agreement should be gradual.
Novak said the process of exiting the deal may take between three and six months, depending on how the global oil market has recovered by then, and on the scale of oil demand.
Under the current deal the producers are cutting supply by about 1.8 million barrels per day.
— Reuters


Saudi Arabia pledges $3bn to Pakistan, defers oil payments

Updated 21 min 20 sec ago
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Saudi Arabia pledges $3bn to Pakistan, defers oil payments

  • It was agreed Saudi Arabia will place a deposit of $3 billion for a period of one year as balance of payment support: statement
  • Pakistan is seeking foreign aid to help plug a massive budgetary gap which the Pakistan prime minister has blamed on the mismanagement of the previous administration

RIYADH: Saudi Arabia has pledged $3 billion in support to Pakistan and allowed for deferred oil payments to help stave off a budget crisis.

The deal came as Pakistani Prime Minister Imran Khan attended the opening of the Future Investment Initiative (FII) in Riyadh on Tuesday.

Earlier Khan met with King Salman and Crown Prince Mohammed bin Salman to discuss bilateral issues. It was his second visit to the Kingdom in just over a month.

“It was agreed Saudi Arabia will place a deposit of $3 billion for a period of one year as balance of payment support,” Pakistan’s Foreign Ministry said in a statement.

“It was also agreed that a one-year deferred payment facility for import of oil, up to $3 billion, will be provided by Saudi Arabia. This arrangement will be in place for three years, which will be reviewed thereafter.”

During his address to the gathering of global business executives, Khan also confirmed that Pakistan was in talks with the International Monetary Fund (IMF) for a new bailout.

Pakistan is seeking foreign aid to help plug a massive budgetary gap which the Pakistan prime minister has blamed on the mismanagement of the previous administration. During his election campaign, the former cricketer vowed to create 10 million jobs and establish an “Islamic welfare state.”

After a consultative visit last month, the IMF had warned that Pakistan needed to quickly secure “significant external financing” to avert a crisis. 

Saudi Arabia and Pakistan have also discussed potential investment in mineral resources in Balochistan, the largest of Pakistan’s four provinces which borders Iran and Afghanistan.

Further discussions were held about a refinery project in Pakistan, the Finance Ministry said in the statement.

Pakistan’s external balance of payments represents one of the biggest challenges facing Khan.

The country’s current account deficit has ballooned as its central bank’s foreign reserves dropped to about $8.1 billion in October.

That was barely enough to meet the country’s sovereign borrowings between now and the end of the year.

The IMF expects Pakistan’s economic growth to slow to about 4 percent in 2019.

Pakistan is seeking to attract increased inward investment to help shore up its finances and Khan used the event as platform to talk about opportunities in sectors such as tourism, minerals, coal and gas exploration.

He also highlighted what he said were the successes of Pakistan in the fight against terrorism, which has brought peace and stability to the country, and pointed to the significance of the China-Pakistan Economic Corridor (CPEC).

China has become an increasingly high-profile investor in Pakistan as Beijing pushes ahead with major projects such as the CPEC.