US oil firms tell OPEC their growth will slow

The logo of the Organization of the Petroleum Exporting Countries is seen at OPEC's headquarters in Vienna, Austria, December 5, 2018. (Reuters)
Updated 23 January 2019
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US oil firms tell OPEC their growth will slow

  • The United States has overtaken Russia and Saudi Arabia to become the world’s biggest crude producer
  • OPEC’s forecasts and even US government predictions have repeatedly underestimated US output growth

DAVOS: US oil producers sought on Wednesday to soothe OPEC’s worries about losing market share, telling the group that investors in the US 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 US government predictions have repeatedly underestimated US output growth.
The bosses of US firms Occidental Petroleum and Hess Corp, attending a session at the World Economic Forum in Davos, said that growth of US shale oil output would slow.
The session was a rare occasion when US 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 US resources would start to degrade. “Shale is not the next Saudi Arabia. It is an important short-cycle component,” he said.
US President Donald Trump has repeatedly criticized 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 US 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 recognized.”
Fatih Birol, the head of the International Energy Agency, which represents industrialized nations, said most forecasts were still underestimating US oil production growth.
“There is a huge potential in the US,” Birol told Reuters, adding that the United States could raise output by another 10 million bpd in the next decade.


New Zealand to conduct own assessment of Huawei equipment risk

Updated 18 February 2019
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New Zealand to conduct own assessment of Huawei equipment risk

  • Huawei faces intense scrutiny in the West over its relationship with the Chinese government
  • Several Western countries had restricted Huawei’s access to their markets

WELLINGTON: New Zealand will independently assess the risk of using China’s Huawei Technologies in 5G networks, Prime Minister Jacinda Ardern said on Monday after a report suggested that British precautions could be used by other nations.
Huawei, the world’s biggest producer of telecoms equipment, faces intense scrutiny in the West over its relationship with the Chinese government and US-led allegations that its equipment could be used by Beijing for spying.
No evidence has been produced publicly and the firm has repeatedly denied the allegations, which have led several Western countries to restrict Huawei’s access to their markets.
The Financial Times reported on Sunday that the British government had decided it can mitigate the risks arising from the use of Huawei equipment in 5G networks. It said Britain’s conclusion would “carry great weight” with European leaders and other nations could use similar precautions.
New Zealand’s intelligence agency in November rejected an initial request from telecommunications services provider Spark to use 5G equipment provided by Huawei.
At the time, the Government Communications Security Bureau (GCSB) gave Spark options to mitigate national security concerns over the use of Huawei equipment, Ardern said on Monday.
“The ball is now in their court,” she told a weekly news conference.
Ardern said New Zealand, which is a member of the Five Eyes intelligence sharing network that includes the United Kingdom and the United States, would conduct its own assessment.
“I would expect the GCSB to apply with our legislation and our own security assessments. It is fair to say Five Eyes, of course, share information but we make our own independent decisions,” she said.
Huawei New Zealand did not immediately respond to a request for comment. Spark said it was in discussions with GCSB officials.
“We are working through what possible mitigations we might be able to provide to address the concerns raised by the GCSB and have not yet made any decision on whether or when we should submit a revised proposal to GCSB,” Spark spokesman Andrew Pirie said in an emailed statement.
The Huawei decision, along with the government’s tougher stance on China’s growing influence in the Pacific, has some politicians and foreign policy analysts worried about potential strained ties with a key trading partner.
Ardern’s planned first visit to Beijing has faced scheduling issues, and China last week postponed a major tourism campaign in New Zealand days before its launch.
Ardern said her government’s relationship with China was strong despite some complex issues.
“Visits are not a measure of the health of a relationship they are only one small part of it,” she said, adding that trade and tourism ties remained strong.