LONDON: OPEC is ready to invest funds to aid the production of oil amid a recovery in energy demand and rising prices for crude, the grouping’s chief Abdalla Salem El-Badri said on Tuesday.
“We, OPEC, are ready to invest,” the secretary general of the Organization of Petroleum Exporting Countries told Oil & Money 2009, a London conference for the world’s energy industry.
Most of OPEC’s 12 member countries are satisfied with current oil prices, which on Tuesday briefly hit a one year-high of above $80 a barrel. El-Badri argued that $60-70 oil would not be enough to allow adequate investment levels by OPEC, which pumps 40 percent of the world’s oil.
“$60 to 70 does not permit a huge investment,” he told conference delegates gathered in the British capital.
“You need more money to invest in the off-shore, in non-conventional oil,” he added. “When the prices went down, we postponed about 35 projects. Now we have seen that seven of them, they are coming back,” El-Badri said.
After the oil price fell to a low of little more than $30 a barrel last December, Badri said OPEC members froze 35 projects that would have increased supply.
BP Chief Executive Tony Hayward said the current oil price was “more about the weakness of the dollar,” in contrast to recent years when the market had been driven by fundamentals of supply and demand. Some in OPEC have said they have seen a rise in fuel consumption, including leading exporter Saudi Arabia, whose oil minister Ali Al-Naimi said when the group last met in September that economic growth and related fuel demand had strengthened the oil market.
Speaking in Italy on Tuesday at the inauguration of a new liquefied natural gas terminal, Qatari Oil Minister Abdullah Al-Attiyah placed Asia at the forefront of an upturn in fuel use. “Demand is picking up in India, China and in some parts of the world where it is related to (economic) growth,” he told reporters, although he also said a combination of factors was driving the price.
They included inventories, economic growth in some regions and “investors coming back to the oil market,” he said, referring to financial investors moving into the oil futures market, rather than investors in oil projects.
The head of the International Energy Agency also saw many elements in the oil price, including strong economic recovery in China and India, while developed countries remained subdued.