Libyan official calls for OPEC cut, other African members less keen - CNBC Africa

Libyan official calls for OPEC cut, other African members less keen

Special Report

by Reuters 0

Libyan official calls for OPEC cut, other African members less keen. PHOTO: Crudeoilpeak.com

This follows after oil prices slid to a four-year low this week add to a squeeze on producers' budgets.

So far, Libya is among a minority in the Organization of the Petroleum Exporting Countries, and the only one of the four African OPEC members, to call for an OPEC cut, adding to signs that such a move is unlikely.

"OPEC is facing a challenge to remove the surplus from the market so the price will return to normal levels," Samir Kamal, Libya's OPEC governor and head of planning at the Libyan oil ministry, told Reuters.

He said Libya should be an exception because its recent production losses have squeezed its budget and he expected no impact on Libya's production from any OPEC decision. "The OPEC members know the security situation in Libya," he said.

Libya is struggling with two governments and two parliaments since an armed group from the western city of Misrata seized Tripoli, setting up its own cabinet and assembly while forcing the internationally recognized government to move to the east.

OPEC meets on Nov. 27 to set policy for the first half of 2015 and despite a slide in prices to below 83 US dollars per barrel this week from 115 US dollars in June, many members including powerful Gulf producers are opposed to cutting output.

Top OPEC producer Saudi Arabia has been quietly telling market participants it is comfortable with lower prices in a move that may be aimed at retaining market share and slowing the expansion of rival producers. Kuwait said on Sunday OPEC was unlikely to cut production.

NIGERIA AND ANGOLA QUIET

Of the other three African members, Algeria's oil minister has said he is not concerned by lower prices. Nigeria and Angola have not officially stated their view.

(READ MORE: Implication of OPEC meeting on West Africa's oil and gas sector)

An OPEC delegate from a West African OPEC member said his country was keeping a close eye on prices but was not convinced of the need for supply cutbacks.

"I am not sure it would do any good," the delegate said, declining to be identified. "We are watching to see how the market will behave."

Angola and Nigeria are both seeing their oil output fall due to field declines. When OPEC last cut production, in 2008, they implemented little of their share, analysts said at the time.

Some analysts, including Sam Ciszuk of the Swedish energy agency, have not ruled out the prospect that OPEC could still agree to cut its output when it meets, saying that the Saudi strategy could be aimed at enouraging others to participate.

"It is likely that Saudi might take their production close to where it was when the last ceiling was proclaimed and then start to demand of others to do a bit of a cut," Ciszuk said, referring to OPEC's output target of 30 million barrels per day.

(READ MORE: Libya to export first oil since rebel deal)

Others say OPEC would be better advised to accept lower prices.

"They should respond in a perfectly normal, competitive manner and do what is necessary to protect and even increase their market share," said David Hufton of oil brokers PVM. "OPEC's days as a cartel with pricing powers are over."

 

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