OPEC, non-members may need more output cuts, says Al-Falih

OPEC and non-member oil producers may need to cut crude output further in the future, but will assess the market situation in July before making a decision, Russia's TASS news agency reported, citing Saudi energy minister Khalid Al-Falih.

“We have to see the market and I think by the end of June, in July we will see that the action we have taken has a big impact,” the minister added.

“If for some reason we need to do more, we will consider to do more including extension (of the oil output cut deal), bigger cuts,” he noted.

Last week, OPEC and non-member producers, led by Russia, agreed on extending their production cut deal for a further nine months until March 2018.

The countries had agreed in December last year to cut output by a combined 1.8 million barrels per day for six months, starting Jan. 1, 2017.

A committee set up to monitor the cuts is set to meet in Russia in July. It will then decide whether the cuts were effective in supporting oil prices, which have halved in the last three years on the back of a global oversupply glut, Al-Falih said.

When asked whether Saudi Arabia would consider investments in Russia’s Eurasia Drilling, the minister said the Kingdom is mulling the creation of a fund between the Saudi Public Investment Fund (PIF) and the Russian Direct Investment Fund (RDIF) to invest in energy firms.

“It will not only to buy existing companies but create growth opportunities for Russian companies to invest in Saudi Arabia,” he said.

Last week, Russian news agencies reported that a consortium of funds from Russia, China and the United Arab Emirates are buying a minority stake of 13-15 percent in Eurasia Drilling, Russia's largest oilfield services company by meters drilled. 

Saudi Arabia may also consider investments in Arctic liquefied natural gas (LNG), especially if they can be used to supply LNG to the Kingdom, Al-Falih said.

“Saudi Arabia has a huge market for gas; we have shortage of gas in the Western region. We are looking at existing projects but also at future projects with Russian companies we can do elsewhere – in Africa, in the Mediterranean region etc.,” he added.