Saskatchewan’s energy minister said a deal made by most major oil and gas producers to curb production during the COVID-19 pandemic is a positive thing, but also said the province wouldn’t cut production because it is already reduced.
“Unfortunately, reductions in Saskatchewan’s oil production are already occurring as a result of current economic and market conditions,” Minister Bronwyn Eyre said in a statement to Global News.
“As a result, the Government of Saskatchewan has no current plans to implement mandatory production reductions as a result of this agreement.”
On Sunday, the Organization for Petroleum Exporting Countries (OPEC), Russia and the G20 agreed to cut global oil production by almost 10 million barrels of oil a day.
The move is designed to stabilize global prices after a steep decline in global demand caused prices to plummet. With so many people around the world staying at home to stop the spread of COVID-19, demand for petroleum products shrank.
The deal ends a nearly month-long dispute between Russia and Saudi Arabia that made oil markets, already reeling from a global drop in petroleum demand, even more unstable.
A barrel of Brent crude oil, used as the global market price indicator, cost around $50 USD ($70 CAD) at the start of March, before the coronavirus pandemic hit.
The same barrel cost about $30 USD ($40 CAD) a month later, the lowest price in two decades.
Seamus O’Regan, the federal natural resources minister, welcomed the deal.
He also said the government would be bailing out the ailing Canadian gas sector.
University of Saskatchewan political scientist said the bailout is a necessary step.
“This is a critical national strategic resource,” he told Global News.
“Energy security matters and Canada doesn’t want to be in a position where the oil sector gets gutted out because of the pandemic and the dispute between Saudi Arabia and Russia.”
Poelzer said the price war showed how vulnerable Canada is to market forces.
He also said it could take up to two years for gas prices, and the economy, to return to where it was before the pandemic caused it to shrink.
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