Norway slow to cut its oil production

Norwegian officials including new Oil & Energy Minister Tina Bru were still “evaluating” on Tuesday whether they’ll cut the country’s offshore oil production, even after OPEC and several other oil-producing nations agreed to their own cuts over the weekend. Oil prices ended up falling again on Tuesday, as did the value of Norway’s currency, after widespread criticism that the cuts already agreed aren’t big enough.

Norway is not a member of OPEC and hasn’t voluntarily cut production for nearly 20 years. The double impact, however, of a dive in demand for oil because of the global Corona virus crisis and a recent price war between Saudi Arabia and Russia led to a collapse in oil prices that worries Norway as much as other oil nations. With too much oil on the market and very little demand, it would also be in Norway’s best economic interests if oil prices rose.

Instead they fell again on Tuesday, confirming analysts’ and economists’ criticism that the so-called OPEC+ cuts over the holiday weekend simply aren’t big enough. Even though the Oslo Stock Exchange started its trading week on an upswing for a change, with its main index up 1.62 percent by early afternoon, the price of a barrel of Norway’s North Sea crude opened down. By late Tuesday morning, it was trading at USD 31.42, just half the price it commanded before the Corona crisis brought most of the world to a standstill.

Bru issued a statement on Saturday after taking part Friday in an extraordinary meeting of energy ministers that was organized by the G20 countries. She noted how the G20 countries had agreed on the importance of ongoing access to reasonably priced energy, and claimed “the whole world” was “standing together” in efforts to “get the oil market in balance again.” Bru also noted how the recent steep fall in economic activity and oil consumption, as a result of Corona containment measures, “also hits activity on Norwegian oil fields and our advanced oil supply industry.”

“During the meeting I said that Norway will evaluate a unilateral Norwegian cut in oil production, on the assumption that an agreement between OPEC+ countries on production cuts is carried out,” Bru stated. She added that the G20 meeting provided “important context” but stopped short of revealing how any production cuts might be carried out in Norway, or how large they might be.

Bru told Norwegian Broadcasting Monday afternoon that the government was “a step closer” to a decision on production cuts” and that it “was good” the OPEC+ countries had reached an agreement.

Norway’s oil production in February, before the coronavirus crisis exploded in Europe and the US, amounted to around 1.75 million barrels a day. After adding in natural gas liquids and condensate, production is equivalent to around 2.1 million barrels a day. The US is now the world’s largest oil producer, followed by Saudi Arabia, Russia, Canada, China, Iraq, the United Arab Emirates, Brazil, Iran, Kuwait and Norway.

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