“The oil market is “pretty much in balance,” Bob Dudley the chief executive of BP has told CNBC on Monday.
Speaking at the World Energy Conference in Istanbul he said the current oil price was giving producers a little more breathing room.
“We look at it on a daily basis and it is pretty much in balance. It is pretty much there, within half a million barrels one way or the other,” Dudley told CNBC.
Dudley added with oil stocks still so high, the wider market sentiment may take time to change.
On the cost of production per barrel, Dudley told CNBC that said BP was looking to re-base targets: “We said $60 next year; we are under $55 now. We can see our way to $53 next year.”
“We are going to work hard make these sustainable, so that we don’t have to rely on swings in prices that are volatile and not healthy for industries and consumers and markets.”
The oil-producing cartel OPEC announced at its meeting in Algeria late last month that it plans to agree on an output cut by the time it meets in late November.
The targeted range is to cut production to a range of 32.50 million barrels per day (bpd) to 33.0 million bpd.
On Monday the Saudi Arabian Energy Minister Khalid al-Falih said he was optimistic that while a production deal could be reached, OPEC shouldn’t curb supply too tightly.
Dudley added that the meeting of oil suppliers in Algiers gave those looking for a supply freeze deal some reason to be optimistic
“I will note that countries that traditionally don’t have good relations actually made some understanding and agreement there,” he said.
“It is just the fact that people are talking and there is cooperation is very significant.”
And the BP CEO also pointed out that although the Russian oil industry was “running very fast,” the fact that they were taking part in supply discussions was in itself significant.
Dudley added that Iran’s supply has taken time to get close to pre-sanction levels and that is perhaps what had delayed any supply freeze deal until now.
On future investment, the BP CEO said although his company had to be careful with where it allocated cash it was important to keep building future projects as existing ones wind down.
“There are some really good projects. There is one in the Gulf of Mexico. It was $20 billion dollars [cost] in 2011 and it is now under $9 billion and there are a couple of examples of that,” he said.
Hollywood came to BP this summer when events of the deadly oil rig disaster in the Gulf of Mexico in 2010 were depicted in the film “Deepwater Horizon,” starring Mark Wahlberg.
The oil firm criticized the movie as being an inaccurate dramatization and Dudley said Monday that BP now had now the opportunity to move on.
“We’ve drawn a line under it and it has cost us $61.6 billion, not to put too fine a point on it.
“We know what it is going to cost us. Now we just to be safe, operate reliably, that will give us reliable cash flows and get back to being an oil company,” he said.
The dividend on BP’s shares is around 6 percent yield, which is viewed as highly attractive in the current environment but Dudley said he would continue to defend the payout.
“We’ve got $17 billion dollars of capital per year and we have probably over $25 billion dollars of cash cost.
We can certainly reduce those before we need to cut a dividend which is in the $6 to $7 billion dollar range,” he said.