Will record breaking cuts in production to stop the oil. Crude by saudi arabia and russia agree to the biggest of the reduction in oil. So it will be most affected. Him to the program. Factories shut grounded cars and trucks off the roads in many cities under lockdown demand for oil has collapsed due to the coronavirus pandemic and Oil Prices Fell further when major producers saudi arabia and russia couldnt agree on cutting output. Now theyve set aside their dispute opec and the oil cartels allies agreed to a 10 percent Production Cut the biggest ever but the deal to switch off the top spy 10000000 barrels a day still needs approval from mexico. These circumstances require swift and timely measures all of our Oil Producing countries must pull efforts to change the situation related to the substantial over production of oil in the world the us it didnt take part in the opec discussions on thursday which are the focus of a meeting of g 20 Energy Ministers on friday some analysts say Production Cuts will hurt smaller nations that depend on oil money opec and the International Energy agency warned last month that countries such as angola nigeria and iraq could lose up to 85 percent of the oil and gas income this year. Lets introduce the panel in london alex shindle our president at Energy Intelligence an oil and gas Research Company in new york and one health a Senior Research scholar Columbia University and in johannesburg in south africa n. J. Iraq chairman of the african and edgy chamber thank you for joining us gentleman alex simple question ill start with you is a 10 percent cut going to be enough well i think its the best they could come up with at this point i think any deeper than that was going to really stretch the producers ability to actually deliver so the group signaled and millions of them are there when they achieved it so so i think you know from what was possible its a pretty good outcome though is it going to actually rebalance this market in the short term absolutely not with the coronavirus hitting demands dramatically you know the deficit through the 2nd quarter and even the 1st half of the year is going to be massive so 10000000. 00 is a good start but its not going to fix the problems and so on what do you think do you think really big. Enough wont production wont demand means decline less than the Production Cut more than the Production Cut well 10000000. 00 is the target thats been announced by the go green with alex that was probably the best outcome of the meeting its a very ambitious target some people might say to him be sure it cannot be achieved its the same time too low because the market needs more to rebalance but were going to see additional counts will be announced today from the g 20 and certainly we do see reductions in the u. S. Even by Market Forces if not by political decisions. And j in johannesburg for developing nations is 10 percent going to be enough is going to hurt them it is not going to her purse a big deal on distain deputies the cuts for example if you look at nigeria as he looked at angola you look at about 1000000 barrels coming out of of nigeria im sorry you look at about 100000 coming out of nigeria and maybe even another 70 or 80000 coming out of angola it is going to hurt in the short term but in the long term its going to be beneficial because the Current Crisis right now speaking for developing countries like nigeria congo like the turkey is just not it just doesnt have the countrys budgets it does just as it has with jobs and we already see a lot of job losses so. We want to be in good buckets when you look at it from an African Press specked if and when can i ask you how he would saudi arabia and russia have been to agree big cuts and i want you to explain a little bit about this mean field game theory analysis youve been writing about which suggests that for the very strongest producers like russia and saudi arabia they can afford to ride this out and push the smaller ones on the shale produces out of the market you know this is a very exceptional crisis i mean this is what would be the big. Spoiler alert shocked that this is done has received since the 1973 1st or suck or the war at the time in 173. 00 the price thats why the price move was on the up side this time its on the down side but their significance the implications are in my view have seen a magnitude its going to reshape the production map of the oil industry its going to change the system of governance of the of the our system as well in my opinion but yes what are the analysis that some of my colleagues in a Company Called funder called kairos have done and the clue is measure all the mathematics and some of his colleagues who have invented the means here the branch of game theory there in that list suggests that opec is not country to wait it up and says in the business of stabilizing places its really in the business of optimizing revenues and managing 2 conflicting objectives that of having having a high price and having a high market share with object these are incompatible theyre in conflict therefore the market cycles through peers or price increases and dramatic collapses the mother was signaling for some time that were about to meet. A cliff moment when the price drops off a cliff and that the the last producers the large low cost producers like saudi arabia and russia were pop be waiting for some kind of a shock to get in to keep moving the shock was the crew on their fires so i think. What they have done increasing supply in the face of the demand collapse increases the impact and really has offered them a chance to drive off some of their competitors. I think theyre achieving those objectives the 10000000 goal that was announced yesterday certainly not prevent a price so the price drop or push the price back. Not what it might do response prone or avoid the moment when we run out of Storage Capacity but the result in any event is that its going to be much more difficult to finance all production in some more challenge sectors including in the u. S. And there were going to see some reductions a piece of the margin in Production Capacity so this would increase the market share on the last witnesses alex to go along with any of that this is a coronavirus was the opportunity that russia and saudi arabia might have been waiting for you know i read and. Piece there in a very interesting and it did align with a lot of rhetoric was in the market that this is that the opportunity for the low cost producers actually deliver on what what the what they felt was the only fair way the market should operate why should lower cost producers shut in production and higher cost producers benefit and has been for many years a sway and the coronavirus did give us this interesting opportunity i think what happened here and i think what we found out last week is that russia and saudi arabia in particular were not really prepared for that pain were taken to actually raise their production to maximum levels and then see how low the price goes to drive out everybody else so you know the bait was over how long could these big producers manage Lower Oil Prices and you know i think what i think why this deal came together is that the big countries said you know what its not your interests even over a 6 month 12 month period to have prices be super low even if that drives out higher cost producers the economies politically economically they just couldnt really face that reality is i mean thats how i see it playing out and why they kind of come to the table. Quicker than i think many have expected and jay nigeria set its budget last year xpect in a price of about 57. 00 a barrel for oil its had to change its budget. Sense can come tonight here obviously africas Biggest Oil Producer cani geria ride this out it hasnt got the luxury that saudi arabia and russia have of big financial reserves has it. Of course they do and its going to be very very difficult for for nigeria nigeria unlike angola you dont really have a Big Sovereign Wealth Fund that could be a kind county used to share konami put some release and recreate get what you see right here is that these african countries have to then really have to really rely on d peg you have to what we call big because you do see orpik as a source for stability but i think its just its even bigger and reserves debt the have its also looking at trying to you we vestment into fields that have to be developed some of them really play one to increase production and really create. For the forward him to see more oil or more gas and i think this shift and use a price war has really given as if you thinking and not just when it comes to economy dabs to get in bed damage because youre looking away from crude oil soared focus on crude to really 17 and how we can play with gas and really see how gasoline dissection going to really help us rashid the balance of the market so budgets are tight these very good because for most countries and lets not just look at nigeria lets look at it with korea or guinea lets look at the barn and look at a look at congo but africa is really taking a lot of heat because projects in mozambique would exit a more violent others the having not been counsel but being poured or suspended senate guard had great gas finds would be cosmos and some of them give more than was bornand or delayed and this is in woodside and turned so. We really seen the bronx around here and we called it that disease is really going to change and when this happens the african street just go into a depression and you know get everybody africans start using jobs and it creates a lot of so shocking issues with the area around the continent so be given for any kind of expect a ship when it comes back to saudi arabia or russia or god did it go up the gulf states in the United States and one just back on something that alex said before do you think saudi arabia russia work caught out slightly by the scale of the drop in oil prices they werent quite prepared for it their practice of policy of sucking on the trying to relieve some of the market use in the face of the downturn but theres limits to what they could do and actually i think they were marketing and physical limits saudi arabia has been shipping out a lot of thank you is full of oil that has had trouble finding customers for them i think both countries faced problems challengers that were not just financial challenges i think they could withstand 2 of those challenges thanks to their financial backers but they just had trouble pushing more oil in the system saudi arabia has increased production for manatee we saw the response to the supply response immediately after the breakdown of the opec meeting on march 6th so they were prepared to go into the production but the market could only absorb so much more production so then i think that the time was right to trip through the mover played out the rest of the word came together and agreed to cut production and then were going to see another meeting today at the g. 20 to discuss for further Production Cuts so the objectives i think was achieved but now its time to do. A better back of the its and and adjust to the reality that the market is getting saturated and the get it past the Storage Capacity if there were they get expensive as well. And it is a temperate and 10 percent Production Cut enough for the us shale produces well i think youre going to see i mean the next week well see how the us shell produces react and weve got the g. 20 meeting today where you know it but were going have a lot of discussion of their own countries that are not part of the 0 plus alliance to see how much actually theyre going to be participating that were hearing anything up to 5000000 barrels there more with the next week is the kind of key he week to watch for sort of us shell producers and what exactly are u. S. Production in general or what thats going to what theyre going to be able to deliver and whether theyre going to deliver just the Market Forces impact of Lower Oil Prices than the shut in that will have to show because prices are in the 30 dollars range or whether theres going to be more active management of the market its a Texas Railroad commission and other states that are talking about doing something but this is going to take as we understand about oh a week to sort of play out because its needing theyre going to happen and the 14th next week with the Texas Railroad commission and then sort of a final decision by the end of next week to sort of see how much the u. S. Is really going to be able to commit actively or sort of just by Market Forces and n. J. The developing countries are almost side actors in this game between saudi arabia russia and the u. S. Do they have any leverage at all theyre the ones that are really going to feel most of the pain if they have any way to put pressure toward anyone i think the already putting pressure on them see them true membership in opec countries pick plus dont forget huge role in nigeria or like a creature a guinea if your pick presidency right now is run managed by not a frickin tonight and youre from our geria discussion but when it comes to Market Forces of course that we really have done much with looking at how much we import and how much we use china still has to come out i think between here because their prices bed their. Heck there has been a continuous push among african states on how to get on how does this needs to go about not articulate in countries were very happy we get cuts and what happened at all tech yesterday big deal united together and i talked to a lot many of them to accept it because you understand that if their we get more stock delights market its really good for us been then what has happened is that he had good Lessons Learned from yesterday was in your 4 course on exploration and seem to got to increase young market share so that it can reasonably i not see for a while in shipping these images dying up in the future and thats a good lesson when he concentrated in the big environment so that you can be a player and when do these developing countries have any leverage or is it all of a all out of the game and its all up to saudi arabia and russia and they do anything saudi arabia and russia are really exciting a lot of these women saying and controlling the situation of course the primary driver is their pandemic but you know that the the 2 countries that are the superpowers of oil the largest exporter so it really played their cards in my view quite well and have made the most of this these very difficult circumstances and to go back to the point you raised before in terms of the response of the show producers in the us were seeing a response to the company i was mentioning carol so i work with money to succeed in the in the i dont pass in the us and money to the recount but also the fact whos whos echoing through the fracking wells weve seen a dramatic drop in in fact whos in the number of. Transcribes are active in the in the basin circle the last month weve seen a decline of 105. 00 cubes deep in the in the sudan thats a very dramatic decline in security percent month month a month decline 60 percent you know new news probably more the plan is coming and i like the u. S. Is going to be under some pressure to cut production itself it costs of cant officially do it through it because they want to trust laws how could the u. S. Play its role in cutting production the taxes Railroad Commission they do have the ability to sort of manage texas oil supply so i think if anyones looking for active market in the u. S. It looks like through Texas Railroad commission is the most likely way that could happen though this nagging is in the tax Road Commission has not been utilized for many decades we dont really know how we operate and the current sort of 2020 environment but we do know that the 3 commissioners are not texas for a commission at least one of them its very favor of some active Market Management you need 2 thirds of the members a vote for it for something actually happens so its a matter of convincing one of the other 2 to sort of go along with this but if youre looking for active Market Management this seems like this would be the most likely way it could turn out is it likely im not im not quite sure where youre Different Things i think this one commission is quite optimistic but again you know the issue i have to trust is that resistance by the Oil Companies the sort of us resistance in general that i think isnt free market its a pretty tough its a pretty tough thing to sell to the u. S. But well see as we as we know were in extraordinary times and n. J. With oil prices at these current levels what are the risks the knock on effects to other production projects coming up particularly in Subsaharan Africa more saw them on the wrist the number of course my jurors are going not if we look at our resources shows. Announce for us my showing camry earlier today earlier this week b. P. Announced for us my show on a lot of projects and that is done already put a lot of projects id raise. A lot of exploration is not race and that is also something that you have to really look at the new york your view are you really have to doubt how are you going to solve by the true out this pyramid is going to be whole big because exploration is still going on and on some studies are still going on bed big big ticket items the big money projects its also the game also ive been very very strange and one of the things that we have to really worry about is you have to really look at what is going on in offshore platforms with the current viruses because now companies not paying more attention to that and do not really trying to invest in a lot of your more projects bed for africa i think as well we have to this is a great reports for us to really step it up im put some kind of reserve release that accompanied the companys need look at lisp its got parents granted extensions on p. C. s weight you need because you really have to use these in the 100 you dont track your investment and not kill projects and we have to take it we have to look good or im going to be environment created that framework or more exploration but really short African Companies to use to use gas and to really look at it and you shouldnt be able to abandon whole car content or not to do some of the policies that weve been putting in place to really drive up and growing and i really drive an exploration so you are going to see projects being delayed but thats not all we have to do really great get right back to lead and really drive it i think is probably the same for large american countries or small producers around the world and were going to have to have a. Meeting again later in the air to agree further cuts. Thats quite possible but the whole system of governance is changing so you see the role that the i. E. E. E. Has been playing you know organizing helping organize a g. 20 meeting this is a very significant change. And theres going to be changes within the us as well so part of the issue in india us in terms of whether or not to agree to Production Cuts and now send managed by the new government at the state or federal level involves a conflict between the independent producers and the majors the independence supports but the action gets the majors oppose them and there probably would not mind seeing the he independence or down their operations or put some of the assets pursuit of with themselves up for sale so theres a theres a lot of restructuring going on in the potentially and there was some consideration the restructuring going on before the pandemic its likely that the recent developments will accelerate that trend and that we can see shaping of the of the a landscape in the us as well as in the work a lot and i say you always do you also foresee another meeting as the industry reshapes of each meeting further in the air for further cuts. Well i think i mean opec is really good at dealing with the crisis right in front of them i think that this was the way of dealing with the crisis right in front of them and i think if anyone would say they know what the situation looks like globally economically from the Oil Market Perspective in 6 months you know that its just impossible to tell given that were sort of at the heart of the chronic virus demick right now especially in the west so i mean i think theres always a chance of youve got to come back and reexamine Market Forces and see how things are going and you know are people hearing to 10000000 barrels a day this is going to be a really important thing to watch but you know they will opec is good kind of responding to a crisis and thats what weve seen this week you know a major crisis and they pulled off a pretty improbable deal and j. R. C. You know to go away there do you see a further meeting later this year for further cuts and can the developing countries sustain those. I think it is going to be a meeting and it is going to be for the cards that needs to be for the cards president god bless him he has been not always been the biggest friend of peg beard i think with some of his most recent tweets hes really encouraged to work and i think thats a sea change when we look at the perspective of washington and this president and how he had he has a huge opening and i think he now out of the presidency gives the United States now he started 0 big as a force for stability all big that hes going to do with you that said im one alexander i have mentioned there is going to be likely another maybe because you have to really see a Global Market this is not going to sit without a global cut this is not going to successful but one other thing it could be education is going to be compliance how are we going to ensure and force compliance and the need to get together within the next 60 next 6 to be is to 1st of all look at compliance how we think how weve managed that and also look at us in the bin and reduces the need to come to a game can be only asked do you need to come in and do you need to plead your part so theres no we and canada because in canada right now a pint of beer is more important than a barrel of oil and we need to shop with industry ok world fortunately out of time gentleman but thank you to all our guests alex antoine health and jay iraq and thank you too for watching you can see the program again any time by visiting our website aljazeera dot com and for further discussion go to our Facebook Page facebook dot com forward slash a. 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About us and in doha the top stories on aljazeera the World Health Organization is warning governments against the early rollback of restrictions aimed at containing the coronavirus pandemic it says the rate of infection has been slowing in some countries but others are seeing an alarming surge i know that some countries are already planning the transition out of stay at home restrictions w. H. O. Wants to see distractions lifted as much as anyone i descend to