Adnoc to talk to customers after new oil output deal

'Any reduction in uptake will be planned, and undertaken, in coordination with Opec, following its ministerial meeting,' the oil company said in a statement.

Adnoc said any crude production cut would be coordinated with Opec. Mona Al Marzooqi / The National

Abu Dhabi National Oil Company (Adnoc) said it would tell customers within days about any potential change to their crude allocation for January 2017 as non-Opec producers agreed to production cuts.

Non-Opec oil producers meeting in Vienna agreed yesterday to reduce their output as part of a global deal with their Opec peers.

It represent the first such joint move since 2001 as the world’s big oil producers move in concert to remove a global glut.

It follows a decision by the Organisation of the Petroleum Exporting Countries (Opec) last month to lower its monthly output by 1.2 million barrels per day as of January.

Russia had already announced its plans to reduce production by 300,000 barrels a day next year, down from a 30-year high last month of 11.2 million barrels a day.

In a surprise move, Kazakhstan pledged a modest output cut after coming under strong diplomatic pressure, delegates said.

The International Energy Agency (IEA) expected the Asian nation to boost production in 2017 by 160,000 barrels a day after a giant oilfield started pumping. The agreement in Vienna represents the strongest effort yet by oil-rich countries to end a market share war that has shaken investors, hit energy companies and damaged economies.

Oil prices have surged more than 15 per cent since Opec announced it would cut production for the first time in eight years, rising this week briefly above $55.

Although prices are well below the $100 a barrel level prevailing since the market share war started, they have more than doubled since January.

The price rise has brought breathing space to oil-rich economies and propelled the share prices of energy groups from major companies such as Exxon Mobil to shale firms such as Continental Resources. If Opec and non-Opec countries stick to their promises, the oil market could turn into a deficit by the second half of the year, boosting prices.

Adnoc said it would be in touch with its customers about potential changes to their allocations.

“Any reduction in uptake will be planned, and undertaken, in coordination with Opec, following its ministerial meeting, which was held on November 30 and stipulated that each member state should adhere to a specified oil output cut,” said Adnoc.

Saudi Arabia has already started to tell its customers it will reduce crude shipments from January, with the curbs focused on Europe and North America.

Saudi Aramco, started informing clients on Thursday night.

It is understood that the focus of the cuts was outside Asia as the region is less oversupplied than others.

Energy consultants PIRA Energy and Energy Aspects are also telling clients that Saudi Arabia has started to reduce the so-called monthly nominations, or the amount that refineries receive under long-term contracts.

Saudi Arabia increased oil production to an all-time high of nearly 10.7 million barrels a day in July. Since then, it has reduced slightly to 10.5 million barrels a day last month.

A year ago, Saudi Arabia was producing 10.3 million barrels a day.

* with Bloomberg and Reuters

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