OPEC+ close to deal on next phase of oil cuts

1 / 2
Prince Abdul Aziz bin Salman, the Saudi energy minister, held phone discussions with his counterpart in Iraq. (File/AFP)
2 / 2
OPEC Secretary General Mohammad Barkindo delivers his speech during the presentation of the World Oil Outlook in Vienna, Austria November 5, 2019. (REUTERS)
Short Url
Updated 14 July 2020

OPEC+ close to deal on next phase of oil cuts

  • Saudi energy minister stresses importance of alliance members meeting production targets as experts point to markets rebalancing

DUBAI: OPEC+, the oil alliance led by Saudi Arabia and Russia, is close to a deal that will take it to the next stage of the historic agreement signed in April to limit global crude production.

Ministers from the 23 countries of the alliance will meet via webinar on Wednesday to seal the deal, but behind the scenes officials from the Organization of the Petroleum Exporting Countries (OPEC) have been in talks to finalize details of the agreement to add roughly 2 million barrels per day (bpd) of oil to current levels.

Prince Abdul Aziz bin Salman, the Saudi energy minister, held phone discussions with his counterpart in Iraq, Ihsan Ismail, where they affirmed their support for the new phase of the OPEC+ deal, which they agreed would “enhance oil market stability and help accelerate the rebalancing of global oil markets.”

In a call with Timipre Sylva, the Nigerian minister for petroleum resources, Prince Abdul Aziz emphasized the importance for all OPEC+ participants to meet production targets.

Russia has already signaled its desire to implement phase two of the OPEC+ agreement.

Experts believe that global oil markets had made big progress toward rebalancing since the mayhem of March and April, when oil prices collapsed.

Demand has increased as economies around the world come out of lockdown.

FASTFACT

Russia has already signaled its desire to implement phase two of the OPEC+ agreement.

OPEC+ efforts to reduce supply have been effective, and members have been meeting ambitious targets for compliance with the output levels.

The vast majority of producers have hit targets of 100 percent compliance. Some — including Saudi Arabia as the leading OPEC producer — have exceeded their targets.

The next OPEC+ schedule, which will start on Aug. 1, will see cuts in production tapered to 7.7 million bpd from the current level of 9.6 million bpd agreed in April.

OPEC+ policymakers have been encouraged by pledges from some of the countries that had missed earlier targets — such as Nigeria and Iraq — that they would make up those shortfalls by compensatory cuts in production in the summer months. Nigeria has promised 100 percent compliance.

Oil producers in the Middle East traditionally use more fuel oil domestically during the hot summer months, and that will be accentuated this year as people who would have travelled for vacation, stay at home because of the coronavirus disease (COVID-19) pandemic-related travel restrictions.

The OPEC+ agreement, as well as natural declines in other oil-producing countries because of falling demand and crude prices, is credited with rebalancing the global market.

OPEC Secretary-General Mohammed Barkindo said: “If we had not acted in such a decisive way, the market would have been in danger of a near-total collapse.”

Oil prices have more than doubled since the lows of April. Brent crude traded at $43.25 per barrel yesterday.


Arabtec Holding said to hire AlixPartners for debt advisory

Updated 25 September 2020

Arabtec Holding said to hire AlixPartners for debt advisory

DUBAI: Dubai-listed contractor Arabtec Holding has hired advisory firm AlixPartners to help it restructure the company’s debt, two sources familiar with the matter said.

AlixPartners is assessing the company’s debt profile, before any potential discussions with Arabtec’s creditors, according to the sources, who declined to be named as the matter is not public.

Arabtec did not respond to a query for comment when contacted on Thursday. AlixPartners declined  to comment.

Arabtec Holding is due to hold a shareholder meeting on Thursday afternoon to decide whether to continue operating or liquidate and dissolve the firm after the pandemic hit projects and led to additional costs.

FASTFACT

 

Arabtec last month posted a first-half loss of 794 million dirhams ($216.18 million).

The company, which last month posted a first-half loss of 794 million dirhams ($216.18 million) and total accumulated losses of 1.46 billion dirhams, said on Sept. 9 that it was calling a general assembly under an article of UAE company law.

The law requires companies to vote on whether they should continue operating if their accumulated losses reach half of their issued share capital.

Shares of Arabtec Holding, which helped to build the Louvre Abu Dhabi and the world’s tallest skyscraper, the Burj Khalifa in Dubai, have plunged 56.7 percent this year. They were down almost 5 percent when a suspension of trading was triggered at 1 p.m. local time ahead of the meeting, which was being held in Abu Dhabi.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

This week, creditors started to enforce claims against Abu Dhabi-based Al Jaber Group, which has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Dubai-listed construction firm Drake & Scull is working under the UAE bankruptcy law to reach an agreement with its creditors in an out-of-court process.