OPEC waiting for Russia before deciding how much oil to cut
Opec has made a planned cut in oil output effectively conditional on the contribution from non-Opec producer Russia, delegates said on Thursday as the group gathered in Vienna for a meeting aimed at supporting battered oil prices. Five delegates said the group was waiting for news from Russia as Energy Minister Alexander Novak had flown back from Vienna for a possible meeting with President Vladimir Putin. Novak returns to Vienna on Friday for talks between Opec and its allies, following discussions among Opec producers on Thursday. “I am optimistic. There will be a deal, but it is unclear how much Opec and how much non-Opec will contribute. It is still under discussion,” one delegate said. Three delegates said Opec and its allies could cut output by 1 million barrels per day if Russia contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd. “The cut will be between 1.0 and 1.3 million bpd. We just have to see how it will be distributed,” another delegate said. The Middle East-dominated Organization of the Petroleum Exporting Countries plans to cut output despite pressure from US President Donald Trump to support the global economy by keeping oil prices low. Opec’s de facto leader, Saudi Arabia, has indicated it wants the organisation and its allies to curb output by at least 1.3 million bpd, or 1.3 per cent of global production. Riyadh wants Moscow to contribute at least 250,000-300,000 bpd to the cut but Russia insists the amount should be only half of that, Opec and non-Opec sources said. The cuts would take September or October 2018 as baseline figures and last from January to June, Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy said on Wednesday. Oil prices have crashed by almost a third since October to around $61 per barrel as Saudi Arabia, Russia and the UAE have raised output since June after Trump called for higher production to compensate for lower Iranian exports. Iranian exports have plummeted after Washington imposed fresh sanctions on Tehran in November. Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry. TRUMP RAISES PRESSURE Washington also gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year. “Hopefully Opec will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!” Trump wrote in a tweet on Wednesday. Possibly complicating any Opec decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many US politicians to impose stiff sanctions on Riyadh.
India may pick natural gas over fuel like China to curb pollution
China’s dramatic increase in liquefied natural gas imports over the past two years may have hogged the headlines, but India may well emulate its neighbour in switching to the cleanest and fastest-growing fossil fuel. As China’s shift to natural gas from dirtier burning fuels such as coal and fuel oil helps improve air quality, Indian cities are rising in pollution rankings. That may increase pressure on lawmakers in India to boost imports of LNG or face “civil unrest,” Paul Wogan, chief executive officer of LNG ship owner and operator GasLog Ltd, said on Wednesday at an industry conference in London. “It used to be if you look at the 50 most polluted cities in the world, 30 of them would be in China,” he said. “If you now look at the 50 most polluted cities in the world, most of them are in India, and the Indian government are looking at this in the same way that China did.” China surprised the industry with the strength of a government-led push to convert to natural gas, which led to a doubling of LNG imports over the past two years. The nation may be a “big part of the solution of absorbing new LNG” as production plants from the US to Australia ramp up next year, Pat Roberts, managing director of LNG-Worldwide Ltd., said in an emailed report. India’s natural gas demand is seen rising 4.9 per cent annually to 2040, outpacing growth of 4.7 per cent in China, according to the International Energy Agency. The Indian government is keen to boost the use of gas to combat air pollution and is promoting the expansion of gas infrastructure, including four additional LNG receiving terminals under construction. “You think about China’s growth and the growth driven by the cleaning of the air. What are other major economies around the world that are in a similar position?” Iain Ross, CEO of Golar LNG Ltd, which operates LNG vessels, floating import terminals and production units, said at Wednesday’s conference. “The next on policy could be India, in terms of legislatively just deciding to do something.”