The UAE on Sunday said it supported an increase in oil output from August but suggested deferring to another meeting a decision by Opec+ on extending its global oil supply pact beyond April 2022, state news agency Wam reported.
The Organisation of the Petroleum Exporting Countries (Opec) and its allies, a group, known as Opec+, will resume talks on Monday after failing to reach a deal on oil output policy for a second day running on Friday after the UAE opposed some aspects of the pact.
“The Gulf producer backs an output increase from August as the market is in dire need of higher production. It is willing to extend the agreement further, if required, but asks that baseline production references — the level from which any cuts are calculated — be reviewed to ensure that they are fair to all parties,,” Wam reported, citing an energy ministry statement.
The UAE and its international partners have invested significantly in growing its production capacity and believes that, if/when the agreement is extended, the baseline reference figures should reflect its actual production capacity, rather than the outdated October 2018 production reference, the ministry said in the statement.
The UAE energy ministry said that an Opec+ ministerial panel, known as the JMMC, which is chaired by Saudi Arabia, had made the output increase conditional on extending the current agreement.
“It makes no sense to attach conditions to an increase in August. We fully support an increase in August,” the ministry said.
Opec+ sources said the UAE said its baseline was originally set too low, an issue it raised before but was ready to tolerate if the deal ended in April 2022 but not if it went on longer. The UAE has ambitious production plans and has invested billions of dollars to boost capacity. The Opec+ pact has left about 30 per cent of UAE capacity idle.
“The UAE is a longstanding and committed member of Opec, and Opec+, and have been a reliable partner in the current Opec+ agreement, delivering compliance of 103 per cent throughout its two-year term,” the Ministry of Energy and Infrastructure has affirmed.
In a statement on Sunday, the ministry said that the UAE believes that the market needs an increase in production and supports an increase from August.
“The UAE has supported production increases in May, June and July of this year which had no extension conditions attached to them. So it makes no sense to attach conditions to increase in August. We fully support an increase in August,” the statement stated.
The statement said the Joint Ministerial Monitoring Committee unfortunately only put one option forward, to increase production on the condition of an extension to the current agreement, which would prolong the UAE’s unfair reference production baseline until December 2022, from the existing agreement end date of April 2022. “
“The UAE proposed to de-couple the matters of increasing production and the extension of the agreement, to progress an increase to production starting in August. But the JMMC insisted on coupling the increase with the extension of the agreement,” the sattement said.
It noted that the Opec+ agreement is scheduled to run for another nine months until April 2022, “so there is plenty of time to review terms for its extension and we see no need for such a condition to be included at this time”.
“The UAE and its international partners have invested significantly in growing its production capacity and believes that, if/when the agreement is extended, the baseline reference figures should reflect its actual production capacity, rather than the outdated October 2018 production reference,” the statement concluded.
Bloomberg news agency reported on Thursday an agreement had been floated that would raise production by 400,000 barrels per day (bpd) each month from August onwards, reaching an extra two million bpd by the end of 2021.
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