The UAE’s biggest oil company, ADNOC, has told some buyers it will reduce shipments for January, Reuters has reported, citing sources in the know.
The biggest cut will be in shipments of ADNOC’s flagship grade, Murban. The company will also cut supplies of the Upper Zakum and Das grades by 15 percent, the sources said.
These reductions come on top of another 20-percent cut in allocations effected for shipments arriving this month.
The Emirati company recently boosted its total oil reserves by 2 billion barrels of oil to 107 billion barrels thanks to new discoveries. Separately, the Abu Dhabi government announced 22 billion barrels of oil in unconventional reserves, saying it had every intention of developing them.
However, the country, one of the three biggest OPEC exporters, is a signatory of the OPEC+ oil production cut deal, which has interfered with its oil ambitions. Earlier this year, as the cartel was discussing the next stage of the deal, reports emerged that the UAE may leave OPEC in order to pursue its own plans for oil, although the UAE denied there were such plans.
The country, however, has not been quiet about its misgivings regarding a Saudi Arabia-led plan to extend the current level of cuts, at 7.7 million bpd, into the first quarter of 2021. In fact, the Emirates supported Russia’s proposal to start adding 500,000 bpd to OPEC+ production beginning next month, to a cumulative 2 million bpd by April.
According to a recent analysis by Reuters’ Rania El Gamal, the increase in Abu Dhabi’s reserves is linked with an increase in its clout within OPEC, potentially setting it against its bigger partner, Saudi Arabia, if their opinions on how to handle production control continue to diverge. In fact, El Gamal wrote, it was the boost in oil reserves that led to the UAE’s disagreement about output control with Saudi Arabia.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com