China’s Sinopec closed four oilfields this week as hopes for a cooperative production cut between OPEC and non-OPEC producers starts to dwindle.
According to the South China Morning Post, Sinopec will temporarily shut down four of its worst performing sites at the Shengli oilfield in the Shandong province.
The Shengli field has been producing for over 50 years.
Sinopec expects the shutdown will save the company about $20 million, or about 130 million yuan, per year in costs and cut losses by about $30 million per year at current crude prices, the South China Morning Post said.
News of the shutdown came just days after a proposed pact between OPEC members and Russia to freeze production was met with a cool reception from Iranian officials.
Russia, Saudi Arabia, Venezuela and Qatar agreed earlier this week to hold production at January levels during a meeting in Doha.
However, implementation of the deal depends on other major producers, including Iran, signing on.
Iran has consistently signaled that it intends to ramp up production now that Western sanctions against crude exports have been lifted.
While Iranian oil minister Bijan Zanganeh has praised the potential production agreement, Iran has not committed to any production freezes or cuts.
Hopes that a meaningful deal between OPEC and non-OPEC producers will be reached were further eroded on Thursday when Saudi Foreign Minister Adel Al Jubeir told the AFP that Saudi Arabia ” is not prepared to cut production.”
Even if a production deal is reached any impact on global supplies will likely not be immediate.
The International Energy Agency said earlier this month that even if OPEC production remains flat it still expects an implied stock build of 2 million bpd in the first quarter of 2016 and a 1.5 million barrel per day build in the second quarter of 2016.