Dubai: Draining a global oil glut will take more time despite an improvement in oil market fundamentals since producers started cutting supplies, the energy minister of the United Arab Emirates said on Tuesday.
"It will take time...It took us from mid-2014 to now. We are correcting but that correction will take time," Suhail bin Mohammed Al Mazroui said in an interview at an event marking the 150th anniversary of Thomson Reuters in the Middle East.
"I believe that generally the market is correcting itself. We have healthy demand growth this year compared to the previous years. There is a demand growth and stocks will go down...That difference is not going to be all gone in six months."
Opec and non-Opec producers agreed in December to cut supplies for six months, helping lift oil prices to around $55 a barrel after a two-year slump. Opec will review policy for the second half of this year at a May 25 meeting.
Mazroui declined to comment on whether producers would extend the deal, saying more analysis was needed and a decision would be up to all involved.
"The good news is that the conformity within Opec and out is improving, which means countries are committed," he said.
The minister said he saw healthy oil demand growth this year and believed global inventories would fall further. Stocks of oil remain about 10 per cent higher in industrialised consumer nations than the five-year average, a key gauge.
The Organisation of the Petroleum Exporting Countries cut output by about 1.2 million barrels per day from January 1 for six months, the first reduction in eight years, to get rid of a supply glut. Russia and 10 other non-Opec producers agreed to cut half as much.
Compliance with the cuts within Opec was over 100 per cent in March, Opec and secondary sources reported, a rare level of commitment to supply curbs for the organisation.
The UAE is complying 100 per cent with the output cut deal, Mazroui said, blaming suggestions that the UAE was not fully complying on discrepancies between production figures submitted by the Gulf Opec producer and those estimated by secondary industry sources that Opec uses to track compliance.
"We are complying in (our) numbers 100 per cent. When I say we will be complying, we will be complying. We are not cheating the market," the minister said.
The UAE was slower than its Gulf neighbours Kuwait and Saudi Arabia to trim supply. UAE output is lower in March because more cuts have been implemented and because of planned maintenance, industry sources say.
Mazroui said that despite the output cuts, the UAE was still on track to raise its oil output capacity to 3.5 million bpd by 2018. Its Opec production target under the supply pact is 2.874 million bpd.
The minister dismissed the suggestion that the UAE might follow Saudi Arabia and consider a public flotation of part of Abu Dhabi's state oil company, ADNOC.
Saudi Arabia aims to sell up to 5 per cent of state oil firm Aramco, listing the shares in Riyadh and at least one foreign exchange to raise cash for investment in new industries as it diversifies away from oil.
By contrast, ADNOC has long granted joint-venture concessions to foreign oil producers. Mazroui said the UAE would consider widening its upstream partners to Asian companies in a review of offshore concessions next year.