HONG KONG, 11 July 2004 — The OPEC producers’ organization will consider further increases to output and will look for spare capacity among its members at a meeting later this month if oil prices stay high, Kuwait said yesterday.
Oil Minister Sheikh Ahmad Al-Fahd Al-Sabah said OPEC would discuss an additional output rise above the 500,000 barrel-a-day (bpd) increase already due to take effect on Aug. 1, which will put the group’s official production ceiling at 26 million bpd.
“Yes, we will try to increase but I think for Aug. 1 it will be only the 500,000 (bpd),” Sheikh Ahmad said when asked if OPEC would increase output if oil prices stay at $40 for benchmark US crude.
“I don’t know who has spare production. For Kuwait we are going to produce at our maximum ... We will discuss in the July meeting, we have to look for extra production or spare production and which members have extra production to give to the market,” he told Reuters in an interview.
The Organization of Petroleum Exporting Countries will review output policy on July 21 in Vienna. The group raised output limits by 2 million bpd in this month and plans the smaller increase in August to cool prices, which soared last month to a 21-year peak above $42 a barrel.
The increases, however, mean little for overall supply to the world’s 81 million-bpd market as OPEC members are already pumping way over limits to stem this year’s price rally.
Market sources estimate OPEC production in June, excluding Iraq, at 27.2 million bpd, 3.7 million bpd above the then output ceiling of 23.5 million bpd.
Sheikh Ahmad, casually dressed at the interview in his suite in the Peninsula Hotel overlooking Hong Kong’s Victoria Harbor, said Kuwait pumped 2.35 million bpd in June and was aiming to have capacity of 2.8 million bpd by the end of the year.
He said talks on raising OPEC’s price band, which targets $22 to $28 a barrel for OPEC’s reference basket of seven crudes, may come up in July or September.
The basket price stood at $35.91 a barrel on Thursday and has been above the upper $28 limit since late last year. Some OPEC members have said the target range should be increased to reflect this year’s price surge. “I think we will go to $28-$35 or $28-$36, $32 will be in the middle, this may be a good price band for the OPEC basket,” Sheikh Ahmad said.
The oil minister, who is part of a Kuwaiti delegation on a tour of four Asian countries — China, Japan, South Korea and Singapore — to court investment, said Kuwait was in talks with a Chinese company to increase oil sales into the world’s second biggest consumer.
“We want to increase the size of our supplies to China ... Now we are speaking of a jump from 20,000 to 50,000 (bpd),” he said, adding that he expected China’s imports of Kuwaiti oil to rise to 70,000 bpd in the first quarter of 2005. He also confirmed that Sinopec Corp., Asia’s biggest refiner, is part of a consortium bidding for a $6 billion oil project in the north of Kuwait. Others in the consortium include US oil major ChevronTexaco Corp. and France’s Total.
