KUWAIT CITY, 22 December 2005 — OPEC President Sheikh Ahmad Fahd Al-Sabah left Kuwait yesterday for China and Russia, respectively the world’s second-largest oil consumers and producers, for talks on future supply and demand prospects.
Sheikh Ahmad, who is also Kuwait’s energy minister, said talks would focus on China’s future demand and Russia’s plans regarding expanding production capacity.
“Talks in China will focus on international energy affairs ... It is part of OPEC’s strategy to open dialogue between producers and consumers,” Sheikh Ahmad told reporters at the airport. “We want to know ... China’s future requirements for energy and its investments in refineries and refining capacity.”
In China, Sheikh Ahmad said he will also complete negotiations that began in Kuwait two weeks ago for the construction of a $5-billion refining and petrochemicals complex in Guangdong province.
On Dec. 5, the two countries signed a memorandum of understanding for the project that includes building a refinery with a capacity of between 200,000 and 400,000 barrels per day (bpd).
In Moscow, meanwhile, Sheikh Ahmad said “we want to know its (Russia’s) future plans for the world oil markets in order to coordinate ... on securing supplies.” He said he will also discuss the latest developments on a $1-billion loan that Russia owes to Kuwait.
The OPEC chief said that despite recent fluctuations in oil prices, they remain range-bound. “Prices, as we see them, remain within a defined range that they have not breached,” Sheikh Ahmad said. He said the 11-nation Organization of Petroleum Exporting Countries will allow oil stocks to build up to a reserve of 54-55 days over the next quarter. “We are allowing the stocks to build up... for that we believe the stocks will build up ... for about 54 to 55 days in the next three months,” he said.
OPEC maintained its production quota at 28 million bpd at a meeting in Kuwait on December 12 and decided not to renew its offer for emergency extra output of two million bpd.
The organization will meet again in Vienna on Jan. 31 to assess an expected seasonal drop in demand for energy between April and September, and a possible cut in output is on the cards. “I don’t want to prematurely anticipate events. Let’s wait until the end of January,” Sheikh Ahmad said when asked if OPEC was inclined to cut output because of forecasts for warmer weather early next year.
OPEC released a report five days ago saying world demand for oil will increase by 1.9 percent in 2006 to 84.9 mbpd with booming China accounting for more than one fifth of the increase of 1.6 million over 2005.
Meanwhile, World oil prices climbed yesterday after US inventories data revealed a heavy fall in distillates, including crucial heating fuel reserves, due to recent cold weather in the United States.
In London, the price of Brent North Sea crude for February delivery won 23 cents to 56.40 dollars per barrel in electronic trading.
Crude oil stocks increased by an unexpected 1.3 million barrels in the week to December 16 to a total 322.5 million barrels, the Department of Energy said, compared with market expectations of a 1.3-million-barrel decrease.
However, in a reflection of colder US weather, distillates stocks, including heating fuel and diesel, fell 2.8 million barrels to 127.7 million — more than triple analysts’ forecasts of an 800,000-barrel drop.
Gasoline (petrol) inventories decreased 300,000 barrels to 204.1 million barrels, compared with predictions of an increase of 1.0 million barrels.
After an initial dip, crude futures rose in response to the data.