U.A.E. Implements Oil Cuts Agreed by OPEC, Hamli Says

By Ayesha Daya and Shaji Mathew

Nov. 3 (Bloomberg) -- The United Arab Emirates, the third- largest oil producer in OPEC, is implementing the supply cuts agreed on by the group last month and has informed consumers.

``We have already advised our customers about the cuts,'' Oil Minister Mohamed al-Hamli told reporters in Abu Dhabi today. He declined to specify the size of the reduction.

The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's crude, resolved to slash production by 1.5 million barrels a day at a summit in Vienna in October to stem a decline in oil prices. Crude futures have fallen 53 percent from their record $147.27 a barrel on July 11 and have dropped 27 percent in the past year.

Al-Hamli declined to comment on whether OPEC will need to make a further production cut. Speculation about holding another meeting is premature because the group will meet again in Algeria on Dec. 17 to review the oil market, he said.

OPEC lowered production by 0.3 percent last month to 31.15 million barrels a day after the group in September decided to adhere to official quotas, according to a report by JBC Energy today. Cuts by Saudi Arabia and the United Arab Emirates of about 120,000 barrels a day each were tempered by an increase of 130,000 barrel a day from Iraq, Vienna-based JBC said.

Investments

The decline in prices isn't likely to affect projects that are already planned, al-Hamli said. ``Investment is for the long term, the projects we have already undertaken are going ahead,'' he said. ``It is important to invest in increasing capacity for the next cycle.''

Crude oil for December delivery dropped as much as $1.27, or 1.9 percent, to $66.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $67.06 a barrel at 10:16 a.m. London time.

``It is common knowledge that the age of easy oil is gone forever,'' al-Hamli said. ``We need to seize the opportunities offered by new discoveries, increase recovery rates from existing fields, improve efficiency and streamline our operations to reduce costs.''

Saudi Arabia, the largest OPEC producer, may renegotiate contracts to increase oil output from the Manifa field and natural-gas production from Karan after energy prices declined, Khaled al-Buraik, executive director of state oil company Saudi Aramco, in an interview today in Abu Dhabi.

``Manifa and Karan may be renegotiated in the current low price environment,'' Buraik said. The changes won't affect the country's plans to increase oil production capacity to 12 million barrels a day next year, he said.

To contact the reporters on this story: Ayesha Daya in Abu Dhabi on adaya1@bloomberg.net; Shaji Mathew in Abu Dhabi on shajimathew@bloomberg.net@bloomberg.net