(Repeats Sunday item, no change to text)
By Ernest Scheyder
HOUSTON, March 5 The biggest names in the oil
world come together this week for the largest industry gathering
since the end of a two-year price war that pitted Middle East
exporters against the firms that drove the shale energy
revolution in the United States.
When OPEC in November joined with several non-OPEC producers
to agree to a historic cut in output, the group called time on a
fight for market share that drove oil prices to a 12-year low
and many shale producers to the wall.
Oil prices are about 70 percent higher than they were
the last time oil ministers and the chief executives of Big Oil
met in Houston a year ago at CERAWeek, the largest annual
industry meet in the Americas.
The ebullience as both sides enjoy higher revenues will be a
welcome relief from the gloom of a year ago, near the depths of
the price war.
"The oil market has been rebalancing and the powerful forces
of supply and demand have been working," said Dan Yergin, vice
chairman of conference organizer IHS Markit and a
Pulitzer Prize-winning oil historian.
"The mood will be different this year."
The capital of the U.S. oil industry Houston is emerging
from the price war sporting new downtown skyscrapers and the
lingering glow from hosting last month's Super Bowl.
OPEC's November deal, the prospects for its continuation
and rosier investment prospects for the industry will dominate
the discussions, with state-run producers and Big Oil both
positioning themselves for an upturn in the notoriously cyclical
Twice as many OPEC ministers as a year ago - plus Russia and
India's top energy officials - will be in the capital of the
U.S. energy industry.
Saudi Arabia's energy minister Khalid al-Falih, who assumed
his role last spring and whose country has contributed the
largest share of OPEC output curbs, addresses the meeting on
Russian Oil Minister Alexander Novak, who was key to
bringing non-OPEC countries on board to cut in tandem with OPEC,
will speak on Monday
Chief executives from five hard-hit international oil
producers - BP, Chevron Corp, Exxon Mobil Corp
, Royal Dutch Shell and Total - will
be listening closely to the ministers' comments to see if those
production curbs will be extended past their June expiration.
The meeting won't be without simmering tension between U.S.
oil producers and OPEC. One of the biggest questions in the oil
market is how quickly and how much shale producers will boost
output. A sharp rise from the U.S. shale patch could undo the
Saudi-led deal to reduce the global oil glut.
Shale activity is humming in the hottest U.S. oilfield, the
Permian Basin, a 75,000 square mile expanse in West Texas. The
U.S. land drilling rig count is up 55 percent in the past 12
months, and many of them are in the Permian.
"It's exciting now to see the rig count rising and business
activity picking up again," said Peter Boylan, chief executive
of Cypress Energy Partners LP, an oilfield service
provider with operations in Texas and North Dakota.
Oil's resurgence isn't confined to America. Already this
year, Total and BP have launched multi-billion dollar deals to
expand in Brazil and Mauritania,
respectively. Better prices could stir a
new round of merger activity, according to some analysts.
Exxon, which is expected later this year be eclipsed by
Saudi Aramco as the world's largest publicly traded oil
producer, recently pledged to boost this year's spending by 16
percent to expand operations, especially in shale production.
That newfound investment vigor and projections for stronger
shale production have kept a lid on the recovery. Oil prices may
struggle to breach $60 per barrel, regardless of how much OPEC
cuts, if the U.S. keeps increasing production, according to a
U.S. crude futures closed on Friday at $53.33 per
BHP Billiton has boosted investment in its shale
operations since last fall, forecasting the sector to become the
single largest generator of cash flow for its petroleum business
within five years.
"We expect a balanced oil market in 2017 for the first time
in nearly three years," said Steve Pastor, president of BHP's
(Reporting by Ernest Scheyder; Editing by Gary McWilliams and