CARACAS, 25 October 2006 — OPEC ministers will discuss reducing oil production by another 500,000 barrels per day to prevent a further drop in prices when the group meets in Abuja, Nigeria in December, said Venezuela’s Energy Minister Rafael Ramirez on Monday.
The ministers fear a supply glut could develop in the second quarter if peak winter demand fails to lower abundant reserves.
Last week at a special OPEC meeting in Doha it was decided to lower production by 1.2 million barrels a day in reaction to recent price drops which have gone below $60 a barrel. It was the first time the 11-nation organization has cut production in two years. The price for crude oil was $72 a barrel in August but had fallen as low as 55 US dollars and is now hovering at $58. Oil inventories in consuming countries are well above seasonal norms, pressing down prices, according to Ramirez.
The group wants to restore market balance at an acceptable level to the producer and consumer, assured the energy minister in an interview with Union Radio. He said the goal of $60 is still high by historical measures, but forecast that it will never again drop to the $30 mark due to “structural factors” such as production capacities at refineries.
OPEC meets on Dec. 14 in Abuja.
Meanwhile, Canada should develop closer ties to the OPEC, the oil organization’s head said Monday ahead of a visit to this country’s booming Alberta oil sands region.
“Canada could well get to a point where they would have to begin to listen to what OPEC is saying ... and maybe, God knows, even a common dialogue with OPEC,” Edmund Daukoru, OPEC president and Nigerian oil minister, told reporters in Calgary. But Canadian officials spurned the invitation, saying they are not interested in closer ties or OPEC membership.
“Canada will not even consider joining OPEC. Our energy production in Canada is based on the principles of a free market. We will not stray from that at all,” Natural Resources Minister Gary Lunn told AFP.
“We’re always looking for new markets around the world. There’s a very large market right beside us (United States). Any new markets we pursue will be based on free market principles,” he added.
Alberta province energy department officials echoed his words, saying the province would continue to market crude oil as it is produced and not try to help maintain global oil prices by limiting output, as OPEC does through quotas.
“We have participated in past OPEC meetings as an observer, and certainly, we have an interest in what’s happening in the marketplace, but in terms of any kind of formal relationship, it’s not in the cards,” Bob McManus, a spokesman for Alberta’s Energy Ministry, said by telephone.
“There are some pretty significant differences between Alberta and most of the OPEC countries: We don’t have a state-owned company that has a monopoly on the production of the resource, so it would be problematic to impose a quota.”
Canada’s oil sands, at an estimated 179 billion barrels, rank second behind Saudi Arabia in petroleum resources. But due to high extraction costs, the deposits were long neglected except by local companies.
While conventional crude oil is pumped from the ground, oil sands must be mined and bitumen separated from the sand and water. Since 2000, skyrocketing crude oil prices and improved extraction methods have made it more economical to exploit the sands. Canada has lured several international oil companies that have invested billions of dollars in projects to mine the sands. Canada now produces 2.5 million barrels of oil per day, including one million barrels from the oil sands, making it one of the world’s top ten energy exporters.
As well, Canada is the biggest exporter of crude oil to the United States.
Prime Minister Stephen Harper described his country to businessmen in New York last month as an “emerging energy superpower.”
OPEC said in its annual report in June that Canada’s oil sands output is likely to climb to 3.5 million barrels per day by 2015.