BEIJING, 23 December 2005 — The Organization of Petroleum Exporting Countries is likely to cut production in the second quarter next year if demand and prices fall, its president said yesterday. “We have to work between own experience and the new situation of the market,” Sheikh Ahmad Fahd Al-Ahmad Al-Sabah told journalists here. “We think we have to decrease our production ... for the second quarter,” he said.
Sheikh Ahmad’s remarks reflected OPEC’s concern that oil demand will fall after winter, pushing prices down. He said OPEC traditionally cut production in the second quarter but has not done so in the last three years because of increased demand from China and India.
Sheikh Ahmad was at the end of his visit to Beijing, where he held talks with Chinese officials about ensuring supplies to the world’s fastest-growing energy user. Before he left for China and Russia on Wednesday, Sheikh Ahmad said oil prices are expected to remain stable and trade within a defined range, adding that the cartel’s stocks could reach a 55-day reserve in the next three months.
OPEC’s production quota stands at 28 million barrels per day (bpd) and it decided at a meeting in Kuwait on December 12 not to renew its offer for emergency extra output of two million bpd. OPEC released a report five days ago saying that world demand for oil will increase by 1.9 percent in 2006 to 84.9 million bpd. China accounted for more than one fifth of the 2005 increase of 1.6 million bpd.
Earlier, China and OPEC started an energy dialogue yesterday aimed at ensuring a steady supply for the world’s fastest growing energy user, officials said. Sheikh Ahmad, who is also Kuwait’s energy minister, met Chinese Vice Premier Zeng Peiyuan and Mai Kai, head of China’s key economic planning body, the National Development and Reform Commission.
In a joint statement, Beijing and OPEC said they had established a future cooperation framework and exchanged views on energy issues — “in particular, the security of supply and demand, in order to enhance market stability.” “China’s economic growth requires secure, steady supplies of energy, while OPEC’s crude oil reserves and production are expected to continue growing, ensuring that there will be enough oil to meet rising world demand for decades to come.” Kazakhstan last week launched a new $806-million oil pipeline to China that symbolizes Beijing’s growing influence in ex-Soviet Central Asia.
China has also been pressing Russia, its largest non-OPEC supplier, to work toward an early agreement on a oil pipeline from Siberian oil fields to China. Russia delivered 5.8 million tons of crude by rail to China last year, and that amount is set to reach 8.0 million tons this year.