OPEC members largely agree that maintaining a stable oil price between $60-70/b is ideal for the global economy, Equatorial Guinea's energy minister said Sunday.
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"We all probably would like higher [oil prices] because we have more revenue, but we are conscious this is not good for the economy," Gabriel Obiang Lima told reporters at the Atlantic Council Global Energy Forum in Abu Dhabi. "It depends on who you ask, but I think the consensus is that that $60-70/b is OK for producers and for consumers."
Front-month ICE Brent closed Friday at $64.98/b, and OPEC and its allies will be closely watching the benchmark in the lead-up to their next meeting March 5-6 in Vienna, when they will decide whether to deepen, ease or extend their production cut accord, said Obiang, who represents OPEC's smallest producer.
OPEC, Russia and nine other countries are in the fourth year of output cuts aimed at supporting prices, with the current deal calling on the 24 countries to cut 1.7 million b/d through the end of March.
"We are saying that the right price is between $60/b and $70/b," Obiang said. "Anything lower than $60/b creates problems for us. Anything above $70/b we understand will not be good for the consumer. If we do the evaluation and that [current] price continues, we should be maintaining the deal."
OPEC ministers are largely loathe to comment on prices, for fear of triggering complaints of anti-competitive collusion. In particular, the US Congress has been considering legislation that would allow the US Justice Department to sue OPEC under antitrust law for manipulating oil prices.
On Saturday, UAE energy minister Suhail al-Mazrouei focused his OPEC comments at the forum on the bloc's desire to prevent market volatility.
The current round of production cuts is aimed at avoiding a supply glut that many forecasters had predicted for the first quarter of 2020, he said.
"We are meeting in March to discuss any measures that we need to do," Mazrouei said. "The objective for all of us in OPEC and OPEC+ is not to achieve a certain price. The objective is to maintain the market balance, so investors can invest."
Obiang said a stable price band helps his country plan for development. Equatorial Guinea's 2020 budget is based on a conservative assumption of $51/b, he said.
The West African producer, which Obiang said was currently producing 120,000 b/d of crude, is expecting to boost output by 20,000 b/d by the end of 2020 as new projects at its Aseng and Ceiba fields ramp up and offset declines from its Zafiro and Alba fields. If the OPEC+ cuts are extended beyond March, that increase would put the country over its quota of 122,000 b/d in the OPEC+ deal.
"We will have to evaluate what we do," Obiang said. "In the meantime, let's see what happens in March."
The minister said Equatorial Guinea expects to announce by June which company will take over ExxonMobil's license in the mature Zafiro field.
The American major still has three years left on its contract but is seeking to divest its holdings in the country.
Output at the aging field, producing since 1996, has been steadily falling, and Obiang said the new operator will be expected to invest a minimum of $1 billion to stem the decline. He estimated that the field still contains reserves of some 1 billion barrels.
ExxonMobil has discovered gas condensates in the south of the field, which could be included in the package that the company plans to divest, Obiang said.
Equatorial Guinea also plans to announce in April a new licensing round that will consist of four to five blocks, he added.
Meanwhile, construction of two modular oil refineries that will process at least 20,000 b/d each should begin by the end of this year, Obiang said. The facilities will allow the country, which currently has no oil refineries, to meet its own refined product needs and export fuels to its neighbors.
A joint venture with Angola on a new refinery in Angola's Cabinda enclave is also still under consideration, Obiang said.