OPEC+ shifts meeting online as officials anticipate extending oil production cuts

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OPEC+ will hold next month’s policy meeting online rather than in person, while several delegates said they expected the group to extend its current supply cuts into the second half of the year.

Saudi Arabia and its partners will gather on June 2 — a day later than initially planned — to review roughly 2 MMbpd of production curbs, introduced to stave off a surplus and shore up crude prices. Crude traders expect the cutbacks will be maintained, and several delegates who asked not to be identified predicted the same.

No exact reason was given for the shift to an online meeting, something OPEC and its partners have been weighing for several weeks. The poor health of Saudi King Salman Bin Abdulaziz and the death of Iran President Ebrahim Raisi may have contributed to the decision, some delegates said.

For many oil market watchers, the policy implications of the decision were clear.

The 22-nation alliance, led by the Saudis and Russia, has been withholding supplies to offset brimming U.S. production and a fragile economic outlook in China and elsewhere. Moving the meeting online is “the clearest indication of a rollover” of existing quotas, said Viktor Katona, head crude analyst at market intelligence firm Kpler Ltd.

The move marks another pivot away from physical meetings for the group, which convened virtually throughout the Covid pandemic and has only held two face-to-face gatherings at its Vienna headquarters since 2020.

It made a similar last-minute switch in November amid a dispute over production quotas for African members. This time, delegates gave no indication of controversy.

Previous extensions of the current round of production curbs, which are being implemented by just eight members, were announced in separate statements by the countries themselves rather than by OPEC+. Supply quotas for the other members have already been set for the rest of 2024.

The group’s intervention is having some success, propping up international crude prices above $80 a barrel in London. Riyadh needs prices close to $100 to cover ambitious spending plans, the International Monetary Fund estimates.

Alongside the decision on whether to extend its production cuts, OPEC+ is reviewing the production capacity of member nations. The results likely will influence their separate targets for 2025.

The process so far has involved tough talks with outside consultants appointed to assess the matter, according to people familiar with the talks who asked not to be identified because those discussions were private.

The United Arab Emirates has been notably public in its stance, with state giant Abu Dhabi National Oil Co. announcing a capacity of 4.85 MMbpd — considerably higher than OPEC’s last estimate.


ExxonMobil, SONATRACH partner to develop Algeria’s oil and gas resources

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Algeria’s SONATRACH and ExxonMobil signed a Memorandum of Understanding to study existing opportunities to develop oil and gas resources in the Ahnet basin and the Gourara basin, with an emphasis on operational excellence, technological innovation , respect for the environment and best sustainability practices.

The Chairman and CEO of SONATRACH said, “We are delighted with this step taken in the collaboration with ExxonMobil, a pioneering company in the energy sector. The signing of this memorandum of understanding opens up new prospects for the development of the Algerian mining sector and demonstrates the mutual desire of the two companies to achieve responsible and sustainable exploitation of our country’s natural resources.

“This agreement is an important first step in the creation of a partnership which will contribute to further unlocking the development potential of Algeria’s resources,” declared in turn Mr. John ARDILL, Vice-President Exploration & New Opportunities of Algeria. ExxonMobil. “Algeria’s long history in hydrocarbon development, along with ExxonMobil’s cutting-edge capabilities and proven experience, position us for success.


UAE’s ADNOC to reach 5 MMbpd oil capacity goal early despite OPEC production quotas

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The United Arab Emirates is on course to achieve its full oil capacity target more than a year earlier than expected.

Abu Dhabi National Oil Co.(ADNOC) is likely to reach its 5 MMbpd goal by the end of next year or early 2026, ahead of the 2027 goal the company had set, according to people with knowledge of the operations. The higher capacity will be a potential source of tension as OPEC and its allies deliberates new production quotas later this year.

OPEC and its partners have been restricting production for years to shore up the market and raise prices. The UAE — which said this month that it had raised capacity from last year’s level — has been eager to use some of its spare volumes. The country has occasionally clashed with OPEC’s de-facto leader Saudi Arabia on the issue, risking a split among the group three years ago, before a compromise was found.

Abu Dhabi is currently producing at about two-thirds of its capability. Its economy is arguably among the most diversified in the Gulf and it faces less pressure to keep oil prices high, though crude remains key to the emirate. OPEC+ is scheduled to review members’ existing capacity levels later this year, and use that to set produciton baseline levels — the starting point from which cuts are calculated — for 2025.

“The UAE is not doing this to generate spare capacity, they’re investing to produce this stuff,” said Ben Cahill, a senior fellow in the Center for Strategic and International Studies. “There’s a tension that is emerging and will be with us for some time within OPEC+.”

ADNOC declined to comment on its capacity target.

Government-owned ADNOC and its partners are ramping up drilling new wells in oil fields and connecting production sites to existing processing stations to squeeze out more out of deposits, said the people who asked not to be named while discussing private, operational matters. ADNOC has outlined a $150 billion spending plan, including on accelerating oil capacity additions, and wants to ensure all of it doesn’t lie idle.


Subsea7 secures offshore contract for Belinda field’s Trion FPSO from Serica Energy for $150 million

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Subsea7 S.A. won a “sizeable” contract from Serica Energy, for the offshore Belinda field development south-east of the Triton FPSO. According to an online statement, the contract is valued between $50 million and $150 million.

The Belinda field is operated by Serica Energy and located approximately 190 kilometers east of Aberdeen in the UK Central North Sea, with a water depth of 95 meters.

The contract scope includes project management, engineering, procurement, construction and installation (EPCI) of a 5-kilometre 8” production pipeline with a 3” piggy-backed gas lift line and an electro-hydraulic controls (EHC) umbilical.

Subsea7’s scope also includes associated subsea structures and tie-ins to the Triton Floating Production Storage & Offloading (FPSO) vessel operated by Dana Petroleum, via an existing production manifold near the Triton riser base and for controls at the Evelyn valve skid.

Project management and engineering work will commence immediately in Aberdeen. The offshore activities are scheduled for Q3 2025.

Steve Wisely, Senior Vice President of UK and Global Inspection, Repair and Maintenance, Subsea7, said: “We are pleased to have this opportunity to supply Serica Energy with EPCI knowledge and demonstrate the extensive North Sea expertise we have amassed over 50 years. We look forward to supporting the safe, efficient and timely execution of this project.”


CNOOC secures five exploration and production contracts offshore Mozambique

CNOOC Limited’s wholly-owned subsidiaries have entered into petroleum exploration and production concession contracts (EPCCs) with the Ministry of Mineral Resources and Energy of Mozambique (MIREME) and Empresa Nacional de Hidrocarbonetos (ENH) for five offshore blocks in Mozambique.

The contracts were signed for a total of five blocks, S6-A, S6-B, A6-D, A6-E and A6-G, all located offshore Mozambique. The total area is approximately 29,000 km2, with water depths from 500 to 2,500 m.

According to the terms of the contracts, the first stage of the exploration period of the blocks shall be four years. The five wholly-owned subsidiaries of CNOOC Limited shall act as the operators in the exploration and development phases and independently owns the operating interests in the five blocks (S6-A 70%, S6-B 77.5%, A6-D 77.5%, A6-E 80%, A6-G 79.5%). ENH owns the remaining non-operating interests (S6-A 30%, S6-B 22.5%, A6-D 22.5%, A6-E 20%, A6-G 20.5%).


ADNOC to increase local manufacturing target to $24.5 billion by 2030 to boost UAE’s economy

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ADNOC announced at the ‘Make it in the Emirates’ forum an increase in its local manufacturing target for critical industrial products in its procurement pipeline to AED90 billion ($24.5 billion) by 2030 to propel UAE’s economic diversification, strengthen the industrial sector and expand local manufacturing capabilities.

The new target is part of ADNOC’s expanded In-Country Value (ICV) program which aims to drive an additional AED178 billion ($49 billion) back into the UAE economy by 2028. ADNOC’s previous 2027 target for local manufacturing of AED70 billion ($19 billion) worth of products was delivered ahead of schedule following the award of two contracts for metal pipes and valves worth AED16.8 billion ($4.6 billion) to local manufacturers.

His Excellency Dr. Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology, and ADNOC Managing Director and Group CEO, said, “In line with the wise directives of the UAE leadership, ADNOC continues to play a pivotal role in enabling economic, social, and industrial growth in the UAE. Since the launch of ADNOC’s In-Country Value program in 2018, we have successfully collaborated with strategic partners to transform this initiative into an integrated national economic program to boost the UAE’s economic development.

“Having successfully delivered on our target to create AED70 billion in local manufacturing opportunities ahead of schedule, ADNOC is now boosting its local manufacturing target to AED90 billion to strengthen the UAE’s industrial sector. This expanded initiative will support the UAE’s economic diversification, attract local and international investors, and provide high-skilled private sector jobs for UAE Nationals. Additionally, it will stimulate entrepreneurial growth and drive sustainability in ADNOC’s supply chain. We invite local and international manufacturers to take advantage of our ICV program and participate in the UAE’s industrial growth journey.”

The contracts include AED8.8 billion ($2.4 billion) for metal pipes to PM Piping Petroleum Equipment, Ajmal Steel, and the Emirati-owned Al Gharbia Pipe Company; and AED8 billion ($2.2 billion) for mechanical valves to Samamat, Camtech Manufacturing, Tisco Valves Manufacturing, PTPA, MT Valves and Industries.

ADNOC’s expanded ICV program will provide a dedicated micro, small and medium enterprises (MSMEs) accelerator program to enable Emirati businesses and local mSMEs to conduct business across ADNOC’s supply chain.

The program will also introduce incentives to embed sustainability in local supply chains by encouraging investors to adopt clean technologies and best-in-class environmental, social, and governance (ESG) practices.

It will accelerate the adoption of artificial intelligence (AI) in ADNOC’s supply chain and enable micro, small and medium enterprises (MSMEs) to participate in strengthening the resilience of the UAE’s industrial base.

Since the launch of ‘Make it in the Emirates’ in 2021, ADNOC has more than tripled its direct spend with local manufacturers for industrial products within its procurement pipeline.

The company has driven AED187 billion ($51 billion) back into the UAE economy since 2018, through its ICV program. ADNOC’s ICV program has also created 11,500 job opportunities for Emirati talents in the private sector in collaboration with strategic partners such as the NAFIS program.

Through the program, contracts worth AED22.4 billion ($6.1 billion) were awarded to Emirati-owned small and medium enterprises (SMEs), across 600 companies.