In Oil & Companies News 18/10/2016
OPEC’s struggle with the first step of its new production deal — agreeing on how much its members are pumping — deepened as Iran became the third nation to openly question the organization’s data.
Output estimates compiled by OPEC’s Vienna-based secretariat are “not acceptable,” Ali Kardor, managing director of National Iranian Oil Co., said Monday in Tehran. Iran is pumping 3.89 million barrels a day, Kardor said, or about 300,000 a day more than OPEC estimated the country produced last month. Iraq and Venezuela have already criticized the data, which OPEC compiles from “secondary sources” such as news agencies.
The Organization of Petroleum Exporting Countries aims to finalize an accord to cut production, the group’s first reduction in eight years, when members convene in Vienna at the end of next month. Yet as nations squabble over how much they’re producing, it will be increasingly difficult to agree on how much each should cut.
The first signs of discord emerged within hours of OPEC’s agreement in Algiers on Sept. 28, when Iraq rejected the group’s assessment of its output. The country has invited media organizations that track Iraqi output for a briefing in Baghdad next week. On Oct. 11, Venezuelan Oil Minister Eulogio del Pino said his country disputed OPEC’s figures as the data exclude a type of heavy oil produced in the Orinoco belt.
‘Price Bloodbath’
Iran and Iraq have been OPEC’s fastest-growing members in recent years, and they’ve either sought or received exemptions from some of the group’s agreements as their production levels recover from sanctions and conflict.
There are “lots of very important questions with no answers to date, and only six weeks to go before the next key OPEC meeting,” said David Hufton, chief executive officer of brokers PVM Group in London. “If nothing concrete emerges on production control, the market will lose patience, with the risk of an end-year price bloodbath.”
Monthly reports from OPEC feature production estimates submitted directly by member countries, as well as data the organization aggregates from a number of external parties, which the group describes as “secondary sources.”
The most recent report, published Oct. 12, showed a wide discrepancy between September production levels reported by Iraq and Venezuela and assessments by OPEC’s secretariat. Iraq’s number was 320,000 barrels a day higher than OPEC’s, while Venezuela’s was bigger by 245,000 barrels a day. Iran didn’t submit a level for September.
In spite of the criticism of OPEC’s statistics, Iranian Oil Minister Bijan Namdar Zanganeh said he hopes the organization will be able to allocate individual production quotas when it meets on Nov. 30.
The group pumped 33.75 million barrels a day in September, data compiled by Bloomberg show. OPEC agreed in Algiers to trim its collective output to 32.5 million to 33 million barrels a day to curtail a supply glut and prop up prices.
Source: Bloomberg
