Global Agreement on Oil Output Freeze Imminent, Says Kuwait

  • Chevron loses two to Escravos fire incident

Ejiofor Alike with agency reports
The Kuwait Governor of the Organisation of Petroleum Exporting Countries (OPEC), Nawal Al-Fuzaia, has said that there are strong indications that a meeting of oil-producing countries on April 17 will reach an agreement to freeze output.

This is coming as Chevron Nigeria Limited (CNL) has confirmed that two employees of its contractors died as a result of Tuesday’s fire incident at the company’s container facility in Escravos, Delta State.

Al-Fuzaia also said in her speech at the country’s oil ministry that she expected the oil market to achieve a balance between supply and demand in the second half of this year, leading to higher average prices.

“There are positive indications an agreement will be reached during this meeting … an initial agreement on freezing production,” Reuters quoted Al-Fuzia as saying.

The OPEC governor is usually a country’s No. 2 OPEC official, after the oil minister.

Two other sources familiar with the issue said the initiative remained on track, even though comments by Saudi Arabia’s deputy crown prince in an interview with Bloomberg last week had dampened hopes of an accord.

A preliminary agenda seen by Reuters on Tuesday and sent to invited nations by the meeting’s host Qatar, indicated expectations for a short gathering lasting four hours, including just 30 minutes slated for a debate on approving the deal.

An initial output freeze agreed in February has helped oil prices rise to almost $38 a barrel from a 12-year low close to $27 in January.

Brent crude price is expected to average between $45 and $60 in the second half of 2016 and until 2018, the Kuwaiti governor said.

Al-Fuzaia did not elaborate on what signs pointed to an agreement in Doha, but said producers might agree to freeze their output at February levels, or at an average of January and February levels.
The original proposal in February by Saudi Arabia, Qatar and Venezuela – members of OPEC – plus non-OPEC Russia, was for a freeze at January production levels.

On Iran’s plan to increase oil output, which Tehran has said it would not abandon, Al-Fuzaia said raising Iranian production was not in itself a problem.

However, there is a problem with Iran’s ability to sell this additional quantity into a saturated market amid weak demand, she said.

Iran is looking to boost output following the lifting of Western sanctions in January.
Meanwhile, Chevron has confirmed that two employees of its contractors died as a result of the fire incident at the company’s container facility at the Escravos.

The company has, however, restated its commitment to operational excellence, stressing that the safety of all personnel and protection of assets remain its priority.

Chevron’s General Manager in charge of Policy, Government and Public Affairs, Mr. Deji Haastrup disclosed in a statement yesterday that a fire broke out in the company’s facility at the Escravos location away from the production operations area on Tuesday, April 5.

Haastrup added that the fire was promptly put out but two employees of contractors to Chevron died in the fire incident.
“Our hearts go out to their families at this difficult time. The incident has been reported to all relevant authorities including our joint venture partner, NNPC and the Department of Petroleum Resources (DPR). We are investigating the cause of the incident,” Haastrup added.

According to him, the company’s priority is the safety of her employees and contractors. “Chevron wishes to reiterate its commitment to operational excellence, the safety of all personnel, the security of assets and protection of the environment,” he added.