18:16 GMT06 March 2021
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    Kuwait's Oil Minister Bakheet Rashidi in an exclusive interview with Sputnik explains why US shale oil output will delay global market rebalancing until late 2018, how Kuwait plans to keep crude output at 2017 levels this year and shares his opinion on future Russia-Kuwaiti economic cooperation.

    by Anastasia Dmitrieva

    Your Excellency, during the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) meeting in Muscat, you called on OPEC, non-OPEC to start addressing as a group ways and means of transforming the declaration of cooperation into a permanent mechanism for maintaining cooperation after the Vienna agreement on oil output cap expires in 2018. Which ways and mechanisms could it be, in your opinion? Did you have a chance to discuss it as a group?

    Bakheet Rashidi: This is not a new initiative. I can tell you that with our partners in Non-OPEC, after seeing the benefits of our cooperation during 2017 we are interested as OPEC Countries and Non OPEC countries in maintaining and boosting the cooperation and we think the best way is to establish a "permanent" frame work that would be the cornerstone for such cooperation in the future if the market requires our collective intervention once again. This is being discussed within OPEC at a level of the Governors and ideas will be formulated during the course of this year to be given to the Ministers for approval and then this will be discussed with the Non OPEC countries.

    Since the beginning of the year we have witnessed a surge in oil prices to over $70 per barrel. What is your forecast for the range of oil prices this year? What will have a primary effect on them?

    Bakheet Rashidi: As you are aware we do not target a price level. Prices are determined by market forces, mainly fundamental forces such as improvement in demand forecasts and restrained supplies to the market. However, there are also many other factors at play such as cold weather, geo-political events, natural disasters that also affect prices. Having said that my personal view is that we will witness strong oil demand growth this year projected to be around 1.5-1.6mnbd, and with OPEC and Non OPEC alliance strictly adhering to restraining production as we saw last year, the market rebalancing will continue to happen. Accordingly prices will reflect that.

    Global oil inventories are currently 118 million barrels above the five-year average level. Will the glut be eliminated by mid-2018? If so, can we expect the revision of the extension of the Declaration of Cooperation at the conference in June?

    Bakheet Rashidi: As I said in my earlier remarks there are many factors at play and some are within our control as producing countries who have signed the Declaration of Cooperation. Nevertheless, other factors such as, US Shale oil growth is beyond our control and therefore with assumptions for growth at 1-1.2mnbd during 2018 we do not expect the market rebalancing by mid-2018.

    READ MORE: Fire Shale: Can the USA Collapse Oil Prices in 2018?

    We hope the market will rebalance sooner rather than later. Nevertheless, our analysis and projections are leaning more towards rebalancing occurring later towards end of the year 2018. We will have to wait and see and that's why we meet regularly to review the market technical analysis done by our experts and we adjust our plans accordingly.

    What is your forecast for oil production in Kuwait in 2018? Will you be aiming for a 100%-conformity or are you planning to over perform your obligations under the Vienna deal?

    Bakheet Rashidi: Kuwait has been steadfast in its commitment to the agreement and as you know our commitment has been exemplary at 100% or more during last year. On average during 2017 our conformity level has been a 100% exactly and we have led by example. We will continue during 2018 with the same spirit and production levels.

    According to JMMC Chairman Saudi Energy Minister Khalid al-Falih, more countries will be asked to join quotas on oil production this year. Can you name these countries? Is OPEC, non-OPEC already conducting negotiations with them? Which countries are willing to join?

    Bakheet Rashidi: Of course OPEC is open to more countries joining if they meet the conditions of the organization and share the same goals and principles. This is different than countries being asked to join the Declaration of Cooperation. There are talks with several countries in Africa and in Asia which I prefer not to name at this stage and I hope to see them joining our efforts to rebalance the market during 2018. One example of this is Equatorial Guinea which was not a part of OPEC when we signed the Declaration of Cooperation, but later in June last year decided to join and become a member of OPEC.

    READ MORE: OPEC, Non-OPEC States Agree to Search New Targets for Market Rebalancing — Novak

    Another topic which was brought up after JMMC in Muscat is how activities of Daesh are affecting the oil market. At the same time, Kuwait is set to host the International Conference for Reconstruction of Iraq on February 12-14, in the framework of which Ministerial Meeting of the Global Coalition to Defeat ISIS will also be held. In your view, how does terrorist activities affect the oil market? Will the conference in Kuwait contribute to settling global conflicts, as well as instability in crude prices?

    Bakheet Rashidi: As I said in my earlier remark geo political tensions and military/terrorists activities have some effect on oil prices. ISIS has been defeated as you all know. Although, they controlled some oil fields in Northern Iraq for some time during 2016/17, I do not believe that they influenced the oil market and as I said, they have now been defeated. The focus is now on rebuilding Iraq after peace has been restored and stability has been enforced. In this context HH The Emir of Kuwait has gracefully offered to host the International conference for the reconstruction of Iraq during 12-14 February 2018 in Kuwait City. Kuwait has been and will be a supporter for stability in the region including Iraq. It is this stability that we need to focus on developing our countries and of course having a stable oil market is a big contributing factor to the economic welfare and development of our countries.

    Your Excellency, you met with Russian Energy Minister Alexander Novak to discuss issues of bilateral cooperation including liquefied gas deliveries, where you confirmed interest in long-term deliveries of LNG from Russia. What was the volume of LNG deliveries in 2017? Did you already decide on the amount in 2018, what is the projected figure? Will it be supplied only by Gazprom? Do you hold consultations with any other Russian companies?  When are you planning to hold next meeting with Mr. Novak or other Russian top officials? Do you already have a date and a place for a meeting of the Kuwaiti-Russian interstate commission in 2018?

    Bakheet Rashidi: I had the pleasure of meeting HE Minister Alexander Novak in Muscat and we discussed many bilateral issues and areas for developing further the excellent relationship between Kuwait and Russia. LNG exports from Russia to Kuwait, upstream cooperation with Russian companies and of course our continued collective support to the Declaration of Cooperation were the main topics of our discussion.

    READ MORE: Russian Energy Minister to Discuss LNG Supplies With Kuwait Oil Minister

    However we expressed our openness to welcoming and boosting cooperation with Russian companies and in this regard we agreed to set up a working level committee to advise and make recommendations to us within the broader framework of the Russian Kuwaiti Joint Cooperation Committee. I also welcomed HE Minister Alexander Novak in Kuwait and any other Russian Officials but we have not specified a date yet for such meeting. The next meeting for Kuwaiti Russian Joint Cooperation Committee will be held in Kuwait city sometime during this year. We have yet to agree on the dates.


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