No Consensus on Output Cuts
Norway oil Minister Einar Steensnaes and his Mexican counterpart Energy Secretary Ernesto Martens finished their meeting Tuesday, without a consensus on the necessary oil cuts.
After a three-hour meeting between Steensnaes and Martens the two failed to come up with any definitive proposals to cut oil production, but seemed to be edging closer to some sort of a decision on output. But neither would comment on their discussion.
Both ministers said it was positive that Russia seems to be adjusting its position on a possible output cut, but indicated that they need more concrete proposals from Russia. Steensnaes said Russia should come up with a "couple hundred thousand barrels" and indicated that a "sensible" Russian contribution would be a cut of 200,000 barrels a day. Martens said a Russian contribution to any output cut is "vital". He also indicated that Jan. 1 could still be an achievable timeframe to implement any theoretical cut.
Martens said he was optimistic that a solution would be reached in the next few days. He also reiterated what he called Mexico's very clear position that it is willing to cut up to 100,000 barrels a day subject to other non-OPEC producers also cutting a proportional amount.
Martens arrived late Monday in Oslo, after a fruitless meeting in Russia to attempt to win an oil output commitment from the Russian government. He is trying to secure a promise from Norway to cap its output.
Last week, OPEC made its decision to cut output by 1.5 million barrels a day as of Jan. 1 conditional on a 500,000 b/d oil output reduction by non-OPEC countries such as Russia and other independent producers like Mexico and Norway. Norway, which produces 3.1 million b/d, is the world's third largest oil exporter behind Saudi Arabia and Russia. In 1998 Norway did cooperate with OPEC by cutting production by 200,000 barrels, but only after the oil price fell to $10/bbl.