According to the terms of pact reached in Vienna last year, Oman is slashing 45,000 barrels per day (bpd) to produce an average of 970,000 bpd. Salim Al Aufi, undersecretary at Ministry of Oil and Gas said he is not satisfied with the current oil prices and when oil reaches $60; that will be time to talk about economic recovery.
“Being satisfied with the results of production cuts will be an overstatement. We would certainly want to see the prices of oil to go higher. We will support any action that will ensure sustainability or improvement of the current oil prices. If extension will secure sustainability or growth in prices, we will support it,” he said.
“When we get to $60, it will be the time to start talking about a potential recovery from the crisis.”
Oil averaged well over Oman’s budgeted $45 in the first half of 2017, thanks to the OPEC (Organisation of Petroleum Exporting Countries) deal reached late last year; however, concerns over a global oil glut prevail.
Al Aufi said the effect of a downturn in oil and gas production and activities has been minimal.
“We haven’t reduced jobs or activities in oil and gas significantly, but instead maintained them. Only small projects have been reduced so even if oil prices go to $60, I don’t see a huge rise in projects as there are a good number of projects still ongoing,” he added.
Oil prices in May dipped even as producers jointly agreed to extend production cuts until March 2018. The markets wanted to see oil producers deepen cuts agreed in OPEC’s November meeting. Al Aufi said deepening cuts was not discussed by the government yet and will be harsh on all oil producers.
According to Sayyid Adham Al Said, professor of Economics at the Sultan Qaboos University and partner at The Firm for Business and Economic Consulting, extending production cuts will be good for oil prices in the short term, but would not be sustainable.
“We noticed that supply of crude in the market is still very high and demand is not rising fast enough. The U.S. shale producers don’t seem to be slowing down and have thrived at below $60 levels by reducing costs. The solution to cut prices definitely has a positive effect on prices and government fiscal position but in the long run, it is not a lasting solution,” he said.
Meanwhile, oil and gas has crept back as one of the top recruitment industries in 2017, after a slow down last year.
Source Link: timesofoman.com