Vienna — OPEC and its oil producer allies may consider extending their existing production deal for another year on top of additional output curbs to offset the impact of COVID-19 on global demand, Equatorial Guinea's energy minister said Wednesday.
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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.
"The initial plan was that 2020 was supposed to be the year we can relax but coronavirus changed everything so there is no question of ending early," Gabriel Obiang Lima told reporters ahead of a key OPEC meeting in Vienna this week.
Equatorial Guinea is OPEC's smallest producer, currently producing around 120,000 b/d of crude.
"I would say it would be another one year so we can monitor what is happening with coronavirus. A key one is the airline business which is definitely having a serious impact (from the virus)...it is a big one," Obiang said.
The Central African producer had been hoping 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.
Saudi Arabia has been urging the OPEC+ alliance to extend the deal and tighten quotas by another 1 million b/d or more. The official OPEC+ recommendation is for 600,000 b/d in new cuts to help rebalance the oil market, but Saudi Arabia has pledged to overcomply by another 400,000 b/d, according to sources.
Obiang said he supported an additional 600,000 b/d of OPEC+ production cuts to the end of the second quarter but he would also be open to deeper output curbs to help support oil prices.
"I think we should do something that definitely supports us all. Clearly, the million (b/d Saudi proposal) is very important. I think it will send a very clear message and we just need to meet to confirm that," he said.
"Definitely (the virus is) going to affect the industry because China is almost shut down and Europe is in the winter right now as in the US. So, clearly, if people are panicking it's going to be even worse."
Brent crude was trading at $52.87/b at 1425 GMT, more than 20% below levels in early January when the coronavirus outbreak first began to spread.
Speaking in January, Obiang said OPEC members largely agreed that maintaining a stable oil price from $60-$70/b was ideal for the global economy.