UAE says it’s ‘reliable and long-standing’ OPEC member as commitment doubts surface
The UAE has always been committed to OPEC, energy minister Suhail al-Mazrouei said Nov. 19, amid reports the country is wavering on continued membership in the producer alliance.
“As a reliable and long-standing member of OPEC, we have always been open and transparent in all our decisions and strategies in support of OPEC,” Mazrouei said in a statement to S&P Global Platts and other media. “We have demonstrated this commitment through our compliance to the current OPEC+ agreement.” The UAE joined OPEC in 1967.
Earlier reports had cited unnamed oil officials in the UAE as saying that remaining in OPEC, with its production cut accords, was becoming too much of a sacrifice.
OPEC and nine allies, led by Russia, are in the midst of talks over 2021 production quotas, having cooperated on output cuts since 2017, with their next meeting Nov. 30-Dec. 1. The group’s monitoring committee meeting on Nov. 17, which Mazrouei attended, ended with no formal recommendation on whether current quotas should be extended beyond 2020 instead of being eased, as scheduled.
The speculation points to potential cracks between Abu Dhabi state oil producer ADNOC and the ministry, observers told Platts. Abu Dhabi holds the overwhelming majority of the UAE’s oil reserves, and ADNOC has ambitious production targets, as well as an increasingly active trading arm.
In July, ADNOC CEO Sultan al-Jaber was promoted to lead a new UAE ministry of industry and advanced technology.
“ADNOC wants to invest and increase production,” an OPEC source said, asking not to be named. “I think the UAE is becoming more assertive about its interests, not just at OPEC. Also feel that some countries are realizing they want to see their oil [produced] while they can.”
The country is OPEC’s third largest crude producer, pumping 2.42 million b/d in October, according to the latest Platts survey of the bloc’s output.
That is far below its quota of 2.59 million b/d, as it implemented “compensation cuts” to make up for earlier overproduction in July and August, which was notable for how unusual it was. The UAE has generally had strong compliance with its quota, even making voluntary extra cuts in some months in conjunction with close Gulf allies Saudi Arabia and Kuwait.
Since October, ADNOC has drastically slashed its monthly crude allocations to term customers due to the compensation cuts, with October volumes slashed 30% for all four of its grades. November will see a 25% cut, while December allocations will be reduced 20%, sources said.
There is precedent for the UAE leaving an energy body, having downgraded its full membership in the Gas Exporting Countries Forum to observer status in 2019.
OPEC, which currently stands at 13 countries, lost Ecuador as a member in January and Qatar in December 2018.