OPEC head warns investment cuts threaten oil supply

Updated 20 September 2016

OPEC head warns investment cuts threaten oil supply

ROME: The head of the OPEC oil organization warned Tuesday that sharp cutbacks in investment by petroleum firms poses a threat for future supplies.

Mohammed Barkindo said that after plunging by 26 percent last year, a further 22 percent drop in investment was expected this year.
Oil firms have slashed their investment budgets as they seek to adapt to the price of crude falling from over $100 per barrel in 2014 to under $30 at the beginning of this year, before recovering to around $45.
On Tuesday, Brazil's state oil company Petrobras announced it will cut investments by 25 percent over the next five years.
Barkindo called the cutbacks a "major concern for industries which need regular investments" and "which threaten our future".
Too severe a cutback in investment could leave the industry unable to meet rising demand in future years.
The OPEC secretary general said "to revise this cut in investments, the process of rebalancing the market needs to be fast tracked".
Oil prices haven't rebounded as there has been too much crude on the market, with OPEC states primarily responsible as they have kept output high, seeking to maintain market share.
Previously, OPEC members would cut back output to balance supply and demand, thus ensuring prices stay at levels sufficiently high for profits and investments.
The 14 OPEC states and Russia are due to meet next week, with Venezuelan President Nicholas Maduro saying Sunday a deal on limiting output was close.
Meanwhile, oil prices recovered on Tuesday from six-week lows, with US crude rising as much as 1 percent, as the market weighed up OPEC comments that a possible production freeze agreement could last longer than expected.
US gasoline futures tumbled 4 percent after Colonial Pipeline Co. said it expects to restart its main 1.3 million barrel per day gasoline line on Wednesday after being shut for more than a week to fix the biggest leak in nearly two decades.
Brent crude futures were down 10 cents at $45.85 per barrel by 12:14 p.m. EDT (1614 GMT). Earlier in the session, they fell to $45.09, the lowest since Aug. 11.
US West Texas Intermediate crude futures rose 45 cents, or 1 percent, to $43.75. WTI's session bottom of $42.55 was also the lowest in nearly six weeks.
The pending expiry after Tuesday's settlement of WTI's October delivery contract, the front-month for the US crude benchmark, had also weighed in New York's morning trade.
Worries that US oil stockpiles may have risen last week, however, limited gains in crude futures.
US crude stockpiles likely rose 2.3 million barrels last week, analysts forecast in a Reuters poll. The American Petroleum Institute (API), a trade group, will release its weekly crude inventory report at 4:30 p.m. EDT (2030 GMT), before official stockpiles data on Wednesday from the US Energy Information Administration (EIA).

Taps and reservoirs run dry as Moroccan drought hits farmers

Updated 22 October 2020

Taps and reservoirs run dry as Moroccan drought hits farmers

  • The problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year in Morocco

RABAT: Two years of drought have drained reservoirs in southern Morocco, threatening crops the region relies on and leading to nightly cuts in tap water for an area that is home to a million people.

In a country that relies on farming for two jobs in five and 14 percent of its gross domestic product (GDP), the problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year.

In the rich citrus plantations of El-Guerdan, stretching eastward from the southern city of Agadir, more than half of farmers rely on two dams in the mountains of Aoulouz, 126 km away, to irrigate their trees.

However, that water has been diverted to the tourist hub of Agadir, where mains water has been cut to residential areas every night since Oct. 3 to ensure taps in households did not run entirely dry.

“The priority should go to drinking water,” Agriculture Minister Aziz Akhannouch said in parliament last week.

In El-Guerdan, Youssef Jebha’s crop of clementine oranges has been compromised by reduced water supply, he said, which affects both the quality of fruit and the size of the harvest.

“The available ground water is barely enough to keep the trees alive,” said Jebha, who is head of a regional farmers’ association.

“Saving Agadir should not be at the expense of El-Guerdan farmers,” he added, speaking by phone.

‘We hope for rain’

El-Guerdan is not alone in facing drought. Morocco’s harvest of cereals this year was less than half that of 2019, meaning hundreds of millions of dollars of extra import costs.

Despite lower production, Moroccan exports of fresh produce have risen this year by 8 percent. 

Critics of the government’s agricultural policy say such sales are tantamount to exporting water itself, given the crops use up so many resources.

A report by Morocco’s social and environmental council, an official advisory body, warned that four-fifths of the country’s water resources could vanish over the next 25 years.

It also warned of the risks to social peace due to water scarcity. In 2017, 23 people were arrested after protests over water shortages in the southeastern city of Zagora.

In January the government said it would spend $12 billion on boosting water supply over the next seven years by building new dams and desalination plants.

One $480 million plant, with a daily capacity of 400,000 cubic meters, is expected to start pumping in March, with the water divided between residential areas and farms.

Until then, “We hope for rain,” the agriculture minister said in parliament.

In El-Guerdan, the farmers are digging for water. A new well costs $20,000-30,000. However, “there is no guarantee water can be found due to the depletion of ground reserves,” said Ahmed Bounaama, another farmer.