Norway Delays 2Q Cuts Until June
Norway's crude oil production is expected to drop by around 450,000 barrels a day in June to fulfill a pledge to OPEC to cut output by 150,000 b/d in the second quarter. "We (Norway) didn't cut anything for the OPEC cuts in April and May, so all the cuts are coming in June," said a source. Some fields will be producing at reduced amounts and other fields are likely to be shut down altogether for a period in June. All the Norwegian fields were at full production for April and May. Norsk Hydro, operator of the Oseberg offshore oil field, has reduced output to 17.7 standard 500,000-bbl cargoes in June from 22.4 standard cargoes in May. Statoil has reduced June production at its Statfjord oil field to 18 855,000-bbl cargoes from 22 cargoes in May. Statoil's Glitne oil field, which produces around 40,000 barrels per day, could even be shut down for the last two weeks of June to comply with the cuts, sources said.
Norway might have decided to leave the cuts until the last minute, hoping that they wouldn't need to be implemented. "We were hoping for some flexibility and that's why the cuts were done in June instead of earlier," the source said. Traders weren't surprised by the decision to cut late in the quarter, as Norway had taken similar action in the first quarter.