Norway gave public backing to OPEC’s historic deal to cut oil production in tandem with non-members, although Western Europe’s largest producer gave no indication it would reverse its previous refusal to directly collaborate with the group.
Eleven non-OPEC countries led by Russia agreed to reduce their combined production by 558,000 barrels a day starting January, adding to a 1.2 million-barrel cut by the Organization of Petroleum Exporting Countries intended to accelerate the oil market recovery. Norway, which did participate in coordinated supply curbs with OPEC in the late 1990s, declined an invitation to the talks in Vienna on Saturday that delivered the historic deal.
“The OPEC decision to reduce their oil production is beneficial for the world,” Tord Lien, minister of petroleum and energy of Norway, said in statement. “We have an open and constructive dialogue with other oil producing countries,” and Norwegian policies are also intended to bring about a stable global market, he said.
Oil has risen 17 percent since OPEC agreed on Nov. 30 to make the first production cuts in eight years. Record global oil inventories built up during three years of oversupply stand in the way of further sustainable price gains, so Saudi Arabia and Russia joined forces to secure the cooperation of other suppliers. Six months of shuttle diplomacy brought about an accord that could accelerate the stockpile decline and hasten the price recovery.
While Norway hasn’t gone as far as nations including Kazakhstan and Oman in pledging to cut its own production, the nation’s verbal intervention underscores how global energy giants are moving toward a period of closer cooperation after three years of fierce competition.
The non-OPEC reduction agreed Saturday is equal to the anticipated demand growth next year in China and India, according to data from the International Energy Agency. Some producers will make deliberate cuts — notably Russia with a 300,000 reduction.
Other participants such as Mexico are effectively counting natural declines in oil production. The Latin American country, which contributed 100,000 barrels a day to the 558,000 non-OPEC reduction, was already expecting its output to drop by about 150,000 in 2017 as a result of years of under investment.
Norway is in a similar position. “We are no longer a large oil producer and exporter on a global scale, and have a declining trend in our oil production,” Lien said in the statement. “Norwegian oil production has been halved in the last fifteen years.”
While crude production is set for a third year of increases in 2016 after beating the Norwegian Petroleum Directorates forecasts in all but one month this year, the NPD still sees a decline from 2017 to 2019. Including forms of light oil such as condensate and liquid hydrocarbons extracted from natural gas fields, Norwegian production is expected to average 1.95 million barrels a day this year, almost unchanged from 2015, and then decline to 1.92 million in 2017, according to the International Energy Agency.