Yesterday Monday October 31st, OPEC officials of the Petro-countries have approved a document setting out the long-term strategy of the cartel. It looks like a rapprochement in the positions of certain of its members on the management of the levels of oil production. Four OPEC sources indicated that the Board of Governors of OPEC, in order to discuss a refreshed 2015 long term strategy, met in Vienna and approved the latest version of the document.
Approval of this document was for several times postponed, Iran and Algeria speaking out in favour of a drop in production from the present OPEC’s so as to support the price of the barrel while Saudi Arabia argued that prices were best to be left to the market and that OPEC should not reduce its production leaving room for the producers with higher extraction costs.
It was in May, that the cartel’s long-term strategy started to be discussed but since then Saudi Arabia and OPEC generally agreed only in principle at the following Algiers meeting to slightly reduce their production, thing that was not done since 2008. This time, at an OPEC meeting in Vienna on Friday, OPEC representatives disagreed first on the terms of their agreement as to the reduction in production, because of Iran’s refusal to level its production to the rest of the cartel’s. But they all agreed on the fact that OPEC should resume its mission of managing its market abandoned since 2014 and become more active in the anticipation of the evolution of demand and supply. But the actual decline in production remains to be implemented.
In the meantime, BQ online magazine published on November 1st, 2016 a report on the Al Multaqa event in Doha, Qatar.
Petroleum industry must take strategic approach to cost transformation
The Middle East petroleum industry must take a strategic approach to cost transformation in order to maintain a competitive place in today’s challenging oil economy, according to global management consulting firm A T Kearney.
Fluctuating oil prices make it critical for businesses to make a ‘step change’ in operating models to remain agile and resilient amid ongoing market variability, said Richard Forrest, global lead partner of A T Kearney’s energy and process industries practice.
Speaking at a recent Al Multaqa networking event held exclusively for members of the Middle East Petroleum Club (MEPC), Forrest said the oil price outlook requires a structural response from both national and international oil companies.
“The current oil price outlook requires all companies to take a hard look at costs. Oil companies need to prepare for a future with continued market uncertainty – it requires a structural change from across the industry,” said Forrest.
North American shale companies have been among the first to respond to this new market environment. With bold ambitions and innovative thinking, some players have managed to drastically cut upstream costs by over 50 percent in the past couple of years.
“We are at a critical point in time where oil companies globally need to reflect and act on the oil market outlook,” said Forrest. “Industry leaders will look to implement the next wave of comprehensive strategic cost transformation.”
He added: “They will consider how to optimize their portfolio, reduce costs collaborating with suppliers and other operators, reshape their operating models and explore how to leverage the merger and acquisition opportunities in the market.”