OPEC and non-OPEC oil producers should not only freeze output but cut it, the former oil minister of Qatar, Abdullah Al-Attiyah, told Reuters. The influential former minister of the leading OPEC Gulf state said action needs to be taken before oversupply becomes unmanageable “like a cancer.”
Al-Attiyah, who served as Qatar’s oil minister from 1992 to 2011, told Reuters that the Saudi/Russia production freeze deal announced in Doha was not adequate to balance the market as the glut continues to expand. His words come after the oil ministers of Saudi Arabia, Iran and Iraq have this week reiterated their intention not to curb oil production.
Cut 2.5 Million Barrels
“If they want to balance the market the solution will be easy. Don’t go slow. If you do, then every time the market will create a glut. Cut 2.5 million barrels and then you will balance the market in a few years,” Al-Attiyah told Reuters. He added that he in conversation with both OPEC and non-OPEC members about this proposal.
“I will ask every producer, do you want quantity or price? They say they want a reasonable price but to reach that there has to be sacrifice. If you do not sacrifice the other will not sacrifice,” he told Reuters in Doha on Monday.
“The oversupply has grown from 1.7 million barrels per day (bpd) to 3 million bpd today. I am very worried about oversupply. It is like a cancer. If you did not deal with it quickly, it would spread.”
“No Way OPEC Will Do It Alone”
But the former Qatari minister also echoed his Gulf peers in OPEC in saying that the 13-member group would not act alone to cut.
He told Reuters, “Saudi Arabia needs a commitment from everyone. The Saudis will be big supporters — but others have to join in…OPEC will never do it alone. No way OPEC will do it alone: 100 percent.”
Saudi, Iran, Iraq: One Freeze, Two No Freeze
Al-Attiyah words echo those of Saudi Oil Minister Ali Naimi, who said in Houston earlier this week that an output freeze is not like cutting production. “That is not going to happen because not many countries are going to deliver even if they say they will cut production — they will not deliver. So there is no sense in wasting our time seeking production cuts.”
On Tuesday, Iranian Oil Minister Bijan Zanganeh told an energy panel in Tehran that the Saudi-Russian proposal earlier this month to freeze oil production was “ridiculous,” and he called requests made for Iran to curb production “a joke.”
And on Wednesday, Iraq’s Oil Minister Adel Abdul Mahdi said that the Doha production freeze agreement would be a dead letter unless “complete agreement” on maintaining production at January levels was reached by all parties.
Qatar: The World’s Biggest LNG Exporter
Al-Attiyah was a key figure in Qatar’s emergence as the world’s largest LNG exporter.
Though EIA data indicate that its crude oil production is the second lowest in OPEC, increasing production of non-crude liquids– the bulk of which is a byproduct of natural gas production– is contributing to growth in total liquids production. Three oil fields are responsible for more than 85% of Qatar’s crude oil production capacity, according to the EIA.
According to the Qatar National Bank (QNB), Qatar’s earnings from its O&G sector represented 49% of the country’s total government revenues in 2014, a figure that has declined over the past four years.