Saudi Arabia will cut crude supply by 380,000 b/d from Nov 1

Saudi Arabia will cut crude supply by 380,000 b/d from Nov 1

London (Platts)--23Oct2006

Saudi Arabia has begun to follow through on its OPEC pledge to cut crude
production by 380,000 b/d from the beginning of November by telling customers
that they will receive less crude next month, an OPEC delegate said Monday.
"Saudi Arabia has started telling its customers over the world that it
will cut their allocations, that Saudi Arabia will cut supply by 380,000 b/d
beginning November 1," the delegate said.
The cut is likely to be concentrated largely on the kingdom's heavier
crude grades, the delegate said. Asked whether the heavier grades would form
the bulk of the cut, the delegate said: "Most likely, yes."
Other OPEC members will also reduce production by the volumes agreed late
last week in the Qatari capital Doha, the delegate said, stressing that these
volumes would be real and not notional.
"Other producers within OPEC will cut according to the numbers decided,
regardless of how their production is estimated," he said.
OPEC agreed last Thursday to reduce actual supply by 1.2 million b/d, and
gave a country-by-country breakdown of the volumes making up the 1.2 million
b/d. It did not detail individual baseline numbers for the cuts or new target
output levels beyond saying that from November 1, the group would reduce
output to a target level of 26.3 million b/d from a September production level
of 27.5 million b/d.
The new cuts have not been made on a strictly pro rata basis from
September production. Four countries which have been facing problems with
output or in fulfilling their nominal quotas this year--Indonesia, Iran,
Nigeria and Venezuela--have shouldered a proportionally higher amount of the
total than would have corresponded to their actual output.
Platts' soundings among delegates suggests that OPEC used a
mixture of secondary source estimates for some countries and figures for
September output provided directly by other member countries.
Earlier Monday, meanwhile, Asian customers of Saudi Aramco reported that
they had been told their November liftings of Saudi crude would be reduced.
Japanese refining sources said Saudi Aramco had told term lifters in
Japan that their November volumes would be reduced by about 8% from contract
volumes.
A source close to Taiwanese refiner Formosa Petrochemicals that their
November liftings would be reduced by about 8% from contact volumes, while
South Korean refining sources said Saudi Aramco had told South Korean term
lifters that their volumes would be cut by about 6% from contract volumes in
November.

Following is a breakdown of the 1.2 million b/d cut, as provided by OPEC:
Country Cut from November 1 (b/d)
Algeria 59,000
Indonesia 39,000
Iran 176,000
Kuwait 100,000
Libya 72,000
Nigeria 100,000
Qatar 35,000
Saudi Arabia 380,000
UAE 101,000
Venezuela 138,000
Total 1,200,000

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