DUBAI, 11 December 2005 — Minister of Petroleum and Mineral Resources Ali Al-Naimi said yesterday that the Kingdom was dedicated to keeping the global oil market well supplied, and would use its spare output capacity if needed. He would not say what he expected from the OPEC meeting that starts tomorrow in Kuwait.
“Saudi Arabia is always working on providing sufficient oil supplies to the global market during normal times and during crises,” Al-Naimi told Kuwait’s news agency KUNA.
“Saudi Arabia increases its output capacity according to developments in expected global demand for oil and it had excess output capacity that is used when crises in global oil supplies occur,” he said.
Al-Naimi, who is expected to arrive in Kuwait today, said OPEC wanted to keep the oil market balanced, as well as avoiding any price increase that would harm the world economy. He said limited global refining capacity, market speculation and political instability in some oil producing states were some factors leading to price rises.
OPEC ministers are widely expected to hold supply steady when they meet tomorrow as they aim to keep prices under control for consuming nations bracing for winter.
The Organization of Petroleum Exporting Countries has a production quota of 28 million barrels per day (bpd), but in September the 11-nation group created a standby two-million bpd allocation to offset hurricane disruption to US output.
Ahmad Fahd Al-Sabah, Kuwait’s energy minister and also current OPEC president, said he and fellow ministers would discuss the matter at the meeting tomorrow.
Asked by reporters whether there was a consensus on the 28-million-bpd quota, he said: “I believe that we will continue with our production level.” As for the offer of extra capacity, Ahmad said: “From the beginning there are different opinions. For that I cannot decide now, we will have to discuss it in the meetings.” Turning to the crucial issue of demand for energy in the second quarter, which typically wanes in line with a warmer climate in the industrialized northern hemisphere, the OPEC chief indicated that now was not the time to make a decision on how to counter such a slump.
Instead, ministers may meet again next month or in early February. “In our experience always in the second quarter there is a decrease in demand and I think for that reason some of my colleagues have already made their comments about their worries for the second quarter,” said Ahmad. “May be we can have a meeting at the end of January, beginning of February to monitor the market for the second quarter.” Kuwait is hosting the 138th OPEC conference at a hotel in Kuwait City amid tight security. First to arrive Friday was Algerian Energy Minister Chakib Khelil who voiced support for maintaining the status quo, including the extra capacity pledge. “The position of Algeria is to continue with the two million barrels per day, we have to work for a stable market,” Khelil said. “We should be able to constantly supply so that the economic growth in the world should be maintained,” he added.
United Arab Emirates Energy Minister Mohammad ibn Dhaen Al-Hamli said in Abu Dhabi yesterday before leaving for Kuwait that OPEC was likely to extend the standby allocation for another period of three months, the official WAM news agency reported.