VIENNA, 23 July 2004 — OPEC is aiming to ramp up its spare production capacity by the end of the year in order to be ready to pump more crude if needed, OPEC President Purnomo Yusgiantoro said here yesterday.
“OPEC is working to increase its (surplus) production capacities from 2.5 million to 3.5 million barrels a day by the end of the year, depending on the call on OPEC oil,” he told a press conference.
“We have to be ready to, if necessary, raise production”, he added.
The Organization of Petroleum Exporting Countries’ spare production capacity is generally estimated to range currently from 1.5 million barrels per day to 2.5 million bpd.
Iran, Nigeria, Saudi Arabia, and, to a lesser extent, the United Arab Emirates would provide the bulk of the surplus production capacity, Yusgiantoro said.
Despite OPEC’s assurances that it is ready to open the taps, global oil prices have been soaring lately amid booming Asian demand, tight stocks and geopolitical tensions.
But with oil prices close to record highs and OPEC thought to be pumping well above stated quotas, fears are growing about how much more production capacity the organization can muster if the market becomes even tighter.
But Yusgiantoro’s comments yesterday left oil markets skeptical and prices remained firmed.
Societe Generale analyst Frederic Laserre said: “OPEC is trying to convince the market that ... it still has spare capacity.”
He raised doubts that the additional capacity would be able “to compensate for production disruptions in Iraq, Venezuela, Nigeria or even Russia given the recent developments in the Yukos affair”.
Oil prices were on the rise yesterday amid fears of disruption to Russian exports after energy giant Yukos warned it might have to declare bankruptcy.
The price of benchmark Brent North Sea crude oil for September delivery rose by 82 cents to $37.98 in late trading in London.
New York’s reference contract, light sweet crude for delivery in September, soared 90 cents to $41.48 a barrel in early deals. Yusgiantoro, who is also Indonesia’s energy minister, stressed the organization did not want high oil prices to continue despite the weakness of the dollar, which cuts into crude producers’ buying power from revenues.
“Let me make absolutely clear that the organization does not wish to see prices rise further, despite the weaker US dollar”, he said.
Amid a background of rising world demand for oil, OPEC agreed in June to raise its official output ceiling by 2.5 million bpd in two stages.
OPEC first increased production by two million bpd on July 1 and was set to raise output by a further 500,000 bpd from Aug. 1.
