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Oil Major Chief Calls Upon Non-OPEC Producers To Join Cuts

The chief executive of Italy’s oil major Eni SpA (NYSE:E), Claudio Descalzi, thinks that OPEC-only output cuts is not enough to lift crude oil prices, and that there should be a broader agreement among non-OPEC producers, the manager told Bloomberg in an interview on Monday.

“OPEC alone is not enough…We have to find a more general consensus among all producers,” Descalzi – who is a speaker at the ongoing Abu Dhabi International Petroleum Exhibition & Conference – told Bloomberg.

Since OPEC agreed in late September that it would be working to reach a deal to limit production to 32.5 million bpd-33 million bpd, there’s been more than a month of reports, hints, and non-committal remarks regarding OPEC’s motivation, ability, and feasibility of scraping together a deal, as well as non-OPEC producers backing or not backing a freeze/cut.

After initially saying in early October that it would back a deal, more recently non-OPEC Russia has continued to ramp up production.

Within OPEC alone, there is no understanding at all, except for giving Libya and Nigeria, and possibly Iran, an exemption from any cuts, due to their recent history of violence and sanctions. Iraq has also joined the group of those demanding an exemption, apart from disputing the way OPEC uses secondary sources to estimate its members’ output.

Saudi Arabia and Iran are reportedly reverting back to their good old ways of bickering. It seems that no two OPEC members are on the same page, let alone all 14 producers.

Descalzi, of course, hopes for a deal to be reached, and hopes that the deal, if reached, will also include non-OPEC producers, because, as he told Bloomberg, $50 oil “is OK” and enough for Eni’s breakeven price and for covering its investments, dividends, and operating cash flow.

Eni, whose third-quarter figures missed estimates, continues to cut capital expenditure in order to “cope with the slump in crude oil prices”.

Speaking to Bloomberg, Descalzi said on Monday:

“2017 will still be a very low capex year, and we have to try to optimize, and we have to reduce capex but be able to maintain production.”

By Tsvetana Paraskova for Oilprice.com

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