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Saudi Arabia says will "do whatever it takes" to balance oil market
May 08, 2017, 10:51:00 AM EDT By Reuters


Reuters
* Likely to extend output cuts, maybe beyond 6 months
* Expects healthier market going forward
* Asia to drive demand over next 25 years

(Releads, adds Falih quote)
By Florence Tan and A. Ananthalakshmi
KUALA LUMPUR, May 8 (Reuters) - Saudi Energy Minister Khalid
al-Falih said on Monday that oil producers would "do whatever it
takes" to rebalance the market and that he expected a global
deal on cutting crude output to be extended through all of 2017.
The Organization of the Petroleum Exporting Countries, of
which Saudi Arabia is the de-facto leader, and other producers
including Russia pledged to cut output by 1.8 million barrels
per day (bpd) in the first half of the year to boost the market.
But global inventories remain high, pulling crude oil prices
back below $50 per barrel <LCOc1> <CLc1> and putting pressure on
OPEC to extend the cuts to the rest of the year. [nL4N1I668P]
"Based on consultations that I've had with participating
members, I am confident the agreement will be extended into the
second half of the year and possibly beyond," Falih said at an
industry event in Kuala Lumpur.
"The producer coalition is determined to do whatever it
takes to achieve our target of bringing stock levels back to the
five-year average," he said.
Falih said recent price falls had been caused by seasonal
low demand and refinery maintenance, as well as by non-OPEC
production growth, especially in the United States.
U.S. oil production <C-OUT-T-EIA> has gained more than 10
percent since mid-2016 to 9.3 million bpd, close to the levels
of top producers Russia and Saudi Arabia.
Despite this, Falih said markets had improved from last
year's lows, when crude prices fell below $30 per barrel.
"I believe the worst is now behind us with multiple leading
indicators showing that supply-demand balances are in deficit
and the market is moving towards rebalancing," he said.
"We should expect healthier markets going forward."
He said he expected global oil demand to grow at a rate
close to last year. In China, oil demand growth should match
last year's due to a robust transport sector, while India should
record healthy growth, he said.
The chairman of energy consultancy FGE Fereidun Fesharaki
said: "They (OPEC) are looking at (extending) for nine to 12
months. Six months is not enough as we'll still be well above
five years average of stocks."

ASIA DRIVES LONG-TERM GROWTH
Almost all expected oil demand growth over the next 25 years
is likely to originate from Asia as the region's population
grows, with countries such as Vietnam and the Philippines rising
to become included in the top 20 global economies, Falih said.
Asia will also account for nearly two-thirds of global gas
demand by that time, he said.
Global investments in exploration and production have also
fallen behind, potentially creating a big supply-demand gap in
the next few years, he said.
"Conservative estimates predict that we will need to offset
20 million barrels per day in combined demand growth and natural
decline over the next five years," Falih said.
"That is why I fear ... we are heading into a future of
supply-demand imbalances."
To help meet this demand, state oil company Saudi Aramco
will invest $7 billion in a refinery-petrochemical project with
Malaysia's Petronas.
Also, Saudi Aramco's project with Indonesia'sPertamina to
expand the Cilacap refinery will enter front-end engineering
design in the second half of this year, Falih said.
Falih shrugged off talk that the rise of alternative energy
could reduce fossil fuel consumption, saying renewables still
face hurdles such as affordability.


Read more: http://www.nasdaq.com/article/saudi-arabia-says-will-do-whatever-it-takes-to-balance-oil-market-20170508-00934#ixzz4gcAD8mYi