UAE is committed to Opec supporting output increase

5 July, 2021 12:00 AM printer

DUBAI: The UAE, Opec’s third-largest producer, said it remains committed to the oil exporters bloc and the Opec+ alliance, the ministry of energy said on Sunday.

The Emirates, which has adhered to Opec+’s with 103 per cent compliance throughout the latter’s two-year term, “believes that the market needs an increase in production and supports an increase from August”, it said in a statement carried by the state-run news agency Wam, report agencies.

It called on members of the exporters’ group to “decouple” output restrictions from a planned extension of the agreement beyond April 2022.

“The Joint Ministerial Monitoring Committee (JMMC) 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,” it said.

Opec+, the group headed by Saudi Arabia and Russia, deferred a ministerial meeting to Monday in light of some member opposition to an extension of the cuts until the end of next year. The group is considering bringing 2 million barrels per day back to the markets by the end of the year.

The UAE, which plans to raise its production capacity to 5 million bpd by 2030 is concerned about an outdated baseline reference that is currently being used to assign its production quotas.

“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agreement is extended, the baseline reference figures should reflect its actual production capacity, rather than the outdated October 2018 production reference,” the country’s energy ministry said.

The UAE’s output for the month of May according to Opec secondary sources reached 2.64 million bpd.

The ministry urged the UAE’s fellow producers to review terms for an extension at a later time.

“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 energy ministry said.

In an interview with CNBC on Sunday, Suhail Al Mazrouei, the UAE’s Minister of Energy and Infrastructure, said the historic agreement reached by Opec+ was not “a fair deal but it was a must deal, we had to do it”.

“Everyone sacrificed, but unfortunately UAE sacrificed the most, making one-third of our production idle for two years,” he said.

“But we did that for the sake of the group, for the sake of correcting the market, for the sake of the world economy and we have done a lot together,” he added.