This month’s Doha meeting of oil producers is being written off even before all the party invitations have been RSVP’d. And its immediate impact on production, let alone exports and prices, will indeed be limited. As the IEA’s executive director, Fatih Birol, told Argus earlier this week, $60/bl could be a price cap as higher values would suck US unconventional producers back into the fray.
But an unpublicised parallel agenda is being circulated to invitees ahead of the meeting and the outcome of these talks could be profound. Each delegation has been asked to propose the basis for a new quota allocation system, and this time it would be one that would include major non-Opec producer countries.
Argus has a presence in all producing regions and its reporters have been entrusted with an insight into the proposals of a number of important countries:
Nigeria — Africa’s most populous nation, approaching 200mn souls, proposes a system based on capacity utilisation determined by population size. So, Iraq, say, with a population of around 35mn and current capacity of around 3.8mn b/d would rein in production to make room for Nigeria to pump at full capacity.
Russia — Moscow has made plain that the only quota criterion that would draw it into Opec — long the nightmare scenario of consumer countries — would be allocation determined by size of territory.
Iran — Tehran has steadfastly refused to commit to a freeze, saying it will boost its output to pre-sanctions levels before considering any constraint. But, longer term, it would be prepared to accept any quota allocation that assured it of higher output than Iraq.
Saudi Arabia — Riyadh will fight tooth and nail to prevent a return to quotas in the foreseeable future, but a senior Opec Gulf delegate who must never be named said, “As long as Saudi Arabia gets more than Iran, we can live with it if the price is right”.
Bahrain — The non-Opec Mideast Gulf minnow is now willing to commit to membership. “As long as Saudi Arabia gets more than Iran, we can live with it if the price is right,” a senior official said.
Venezuela — A ministry official who asked for anonymity said: “I’ve no idea who will be governing the country next week, let alone next month, and nobody has known how much PdV is producing for years, so we’ll sign up to anything that might improve prices.”
Ecuador — An oil ministry official said Ecuador would happily sign up to any production quota that is acceptable to Beijing.
Libya — There will be no Libyan delegation in Doha, for three reasons — the country’s oil industry is struggling to produce at all, so talk of any sort of constraint is irrelevant; nobody knew who to send the invitation to; getting a flight out is challenging. But at least five letters from self-declared rulers of all or part of the country have been sent to Doha, each suggesting that the sender will accept any proposal as long as they are recognised as the legitimate government.
Norway — The Oslo government is keen to commit to a global production quota system decided on the basis of a country’s total offshore resources. Onshore resources should not be included in the calculations. “Why count the onshore? There are no fish there,” a Norwegian fisheries spokesman said.
Indonesia — Opec’s only Asia-Pacific member/leaver/rejoiner is now a crude importer, so it’s not sure why it has been invited anyway. It will table no proposal.
Proposals for the basis for the new global oil production quota allocation system must be submitted to the Doha organisers before noon on 1 April 2016, in other words today. Please email any suggestions to the special Argus reporting team at email@example.com.