Dwindling volumes of the benchmark crudes used in Asian and European oil markets are forcing major players to bolster supplies in a bid to decrease the risk of prices being vulnerable to manipulation, the Middle East Economic Survey reported on Monday.
The Cyprus-based weekly publication said declining production levels have led Petroleum Development Oman (PDO) to rethink its reservoir depletion methodology, and that volumes of Dubai crude continue to decline.
The Oman/Dubai average is used as a pricing benchmark for many other exporters and buyers.
Additionally, Brent crude market pricing service Platts has broadened its definition of the Brent stream to include the UK’s Forties and Norwegian Oseberg crudes from the North Sea. PDO output has fallen sharply due to unforeseen production problems, attributable to an underestimation of the complexity of the geology of the Omani oil reservoirs and its effect on yields in both mature and new fields.
From the PDO target level of 850 000 barrels per day for 2001, production fell to around 790 000 to 800 000 barrels per day in December 2001 and to 760 000 to 770 000 barrels per day in May 2002.
This takes PDO deliveries below the 810 000 barrels per day revised target agreed by the oil ministry in accordance with the Organisation of Petroleum Exporting Countries/non-Opec cutbacks promised in January.
Oman’s other production, mainly from Occidental, has been maintained at 50 000 barrels per day.
The board of PDO is scheduled to meet in Paris this week to set new production targets and to ratify a plan to revive production levels. The shareholders – Oman’s government with 60%, Shell with 34%, TotalFinaElf with four per cent and Partex with two per cent – are expected to finalise a programme which will include both short and long-term proposals. – Sapa-DPA