Oman reveals oil production cut plans under OPEC+ deal

Dubai — Oman will cut oil production from its six largest producing blocks by 23% from their October 2018 baseline levels of 883,000 b/d to adhere with the OPEC+ production cuts coming into effect for May and June.

The drop is equivalent to Oman cutting 201,000 b/d for the two months, with a production quota of 682,000 b/d. Under the previous OPEC+ agreement that expired in March, Oman's quota was 961,000 b/d. Oman is the largest producer in the Persian Gulf that is not a member of OPEC. It is, however, a member of the OPEC+ alliance.

The 23 members of the OPEC+ alliance agreed earlier this month to reduce production by 9.7 million b/d in May and June, followed by a 7.7 million b/d drop in 2H 2020 and 5.8 million b/d cut from January 2021 to the end of April 2022. The agreement is intended to counteract plummeting demand caused by the coronavirus pandemic.

The biggest reduction in volume is coming from Block 6, which is operated by semi-state-owned Petroleum Development Oman (PDO) and responsible for the bulk of the sultanate's crude production. It is slashing 135,000 b/d to produce 453,000 b/d, according to an update on the OPEC website.

Meanwhile, Occidental Petroleum's Mukhaizna (Block 53) is reducing production to 88,000 b/d. The company's Block 9 will be producing 62,000 b/d, and Block 27's new level will be 6,000 b/d.

Daleel Petroleum's Block 5 will now be producing 39,000 b/d, down from 51,000 b/d in October 2018. CC Energy's Block 3 and Block 4 will now produce 30,000 b/d, combined.

Before the OPEC+ deal was struck, Oman's work program and budget had projected total production of 964,000 b/d in May and 965,000 b/d in June. At these levels, the sultanate had predicted a fiscal breakeven price of $85.90/b to balance its books this year.