Saudi Arabia’s energy minister Al-Falih says no OPEC+ output policy change until June

Saudi Arabia’s Energy Minister Khalid Al-Falih speaks during the Saudi-India Forum in New Delhi, India. (File photo/Reuters)
Updated 10 March 2019
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Saudi Arabia’s energy minister Al-Falih says no OPEC+ output policy change until June

NEW DELHI: Saudi oil minister Khalid Al-Falih said on Sunday it would be too early to change OPEC+ output policy at the group’s meeting in April and that China and the US would lead healthy global demand for oil this year.
The Organization of the Petroleum Exporting Countries and its allies such as Russia — known as the OPEC+ alliance — will meet in Vienna on April 17-18, with another gathering scheduled for June 25-26.
Falih said the group was unlikely to change its output policy in April and if required would make adjustments in June.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Falih said.
“We will see where the market is by June and adjust appropriately,” Falih said after a meeting with Indian oil minister Dharmendra Pradhan in New Delhi.
OPEC member United Arab Emirates (UAE) said on Sunday it would continue to meet its obligations to cut supply under the producer agreement.
“We will continue to deliver on the OPEC & Non-OPEC commitment for voluntary production adjustments until the global market is re-balanced,” Minister of Energy and Industry Suhail Al-Mazrouei said on Twitter.
On Jan. 1, OPEC+ began new production cuts to avoid a supply glut that threatened to soften prices. The group agreed to reduce supply by 1.2 million barrels per day (bpd) for six months.
Sources recently said the most likely scenario is that the current supply cuts will be extended in June but much depends on the extent of US sanctions on OPEC members Iran and Venezuela.
OPEC’s share of the cuts is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela, which are exempt. The baseline for the reduction was in most cases their output in October 2018.
For Saudi Arabia, the world’s top oil exporter, Falih said output in April was expected to remain at this month’s level of 9.8 million bpd.
“Aramco is finalizing their April allocations today or tomorrow so we will know more on Monday. But my expectation is that April is going to be pretty much like March.”
GLOBAL OIL DEMAND
Falih said total global oil demand is set to grow by around 1.5 million bpd this year.
“If you look at Venezuela alone you would panic, if you look at the US you would say the world is awash with oil. You have to look at the market as a whole. We think 2019 demand is actually quite healthy,” Falih told Reuters.
In Venezuela, suffering from a political and economic crisis, oil exports have plunged 40 percent to around 920,000 bpd since Washington slapped sanctions on its petroleum industry on Jan. 28.
On the other hand, production in US hit a record of more than 12 million bpd in February.
The International Energy Agency last month left its demand growth forecast for 2019 unchanged from January at 1.4 million barrels per day.
Falih said Chinese demand was breaking records month after month and estimated the country would breach 11 million bpd this year.
He also said that along with China and the US, India’s expanding economy was driving global oil demand growth.
After the meeting, India’s oil minister said he wanted Saudi Arabia to play an active role in keeping oil prices at a reasonable level as rising prices affect the Indian economy.
He also invited Saudi Arabia to partner with India in building strategic oil reserves and further invest in India’s refining and Petrochemical sectors.


Mahathir: Some Malaysian state-owned entities may be listed

Some analysts have speculated the Malaysian government could list a small portion of its stake in state energy firm Petronas to generate revenue. (Reuters)
Updated 10 min 11 sec ago
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Mahathir: Some Malaysian state-owned entities may be listed

  • Malaysia is saddled with debt and liabilities of more than 1 trillion ringgit ($245.52 billion)
  • A government panel to cut debt is looking at strategies
KUALA LUMPUR: Malaysia may list certain state-owned entities to cut government debt and liabilities, Prime Minister Mahathir Mohamad said on Tuesday as it seeks new revenue sources to boost its fiscal position.
Mahathir, elected in a stunning upset last year, has blamed the previous administration of Najib Razak for saddling Malaysia with debt and liabilities of more than 1 trillion ringgit ($245.52 billion).
A government panel to cut debt is looking at strategies, such as “identification of opportunities on potential asset monetization, which means mature unlisted government entities may be listed in the stock market,” he said.
State-linked companies could also pare equity stakes, he told a conference of investors in Kuala Lumpur.
“The key guiding principles for monetising any of our assets is that the disposal or monetization must never be done at fire-sale prices, and any disposal of shares, monetization of assets, auctions or other measures will be done in an orderly manner.”
He did not identify specific companies or fix a timeframe for the plan, however.
Sovereign wealth fund Khazanah Nasional announced a new strategy this month, saying it was gearing up to be a “long-term real return provider” to the government through its commercial investments.
Last month Reuters reported, citing sources, that Khazanah’s new strategy aimed at delivering more cash to the government by pruning stakes in non-strategic assets.
Some analysts have also speculated the government could list a small portion of its stake in state energy firm Petronas to generate revenue.
Petronas is the sole manager of Malaysia’s oil and gas reserves. Although some of its subsidiaries are listed on the national stock exchange, Petronas is fully owned by the government.
Finance Minister Lim Guan Eng said last year the government had no immediate plans to sell stakes in state-owned companies, but did not rule out the possibility in the future.
Lim and Mahathir have blamed corruption scandals in the previous administration for Malaysia’s large debts. The fiscal situation was also hurt after the new government scrapped an unpopular consumption tax, in line with a campaign promise.
Former premier Najib has been slapped with dozens of corruption charges since his defeat in May 2018, many related to alleged money laundering at state fund 1MDB.
He has pleaded not guilty and has consistently denied any wrongdoing.