VIENNA, 18 September 2005 — Minister of Petroleum and Mineral Resources Ali Al-Naimi said yesterday that he favored a rise in OPEC’s official output quota of crude oil, but declined to indicate by how much.
When asked as he arrived here for a meeting of the Organization of Petroleum Exporting Countries if Saudi Arabia supported an increase in the organization’s official production ceiling, Naimi replied, “absolutely yes”.
The Saudi minister noted that any decision to increase the current output quota above its current level of 28 million barrels per day (bpd) would be taken by the full 11-member OPEC, but his support was crucial to such a move. Naimi nonetheless added that he saw no real demand for more crude, but said: “You have to look forward beyond today. Our next meeting is in December and things can change between now and December.” His country would offer to pump up to 11 million bdp toward the total OPEC production, but Naimi did not put a figure on what the group’s new official output ceiling might be.
He reiterated the Saudi view that responsibility for high oil prices lay further along the production line, notably with refiners, and pointed to the aftermath of Hurricane Katrina on oil facilities along the US Gulf coast.
“You know better than I do where the constraints are, they are not on the supply side of crude oil,” Naimi told reporters.
“The constraints are in the downstream and Katrina damaged some infrastructure” needed to put oil products on the market.
London based analysts at Societe Generale said yesterday that “56 percent of Gulf Coast oil production was still down as of Sept. 15, 18 days after Katrina hit.”
OPEC ministers who are to meet tomorrow and Tuesday are nonetheless expected to raise official output - in fact they are already pumping above the current quota - in support of oil-consuming countries where prices at the gas (petrol) pump have soared in the past three years.
United Arab Emirates (UAE) Minister of Energy Mohammed ibn Dhaen Al-Hamili said yesterday OPEC may decide to increase oil production by an “appropriate rate”.
He declined to say what increase could be expected, saying only that the OPEC ministerial meeting beginning next Tuesday would review global prices in terms of the supply and demand. “The UAE supports rise in production if there is a consensus among member states,” he told the local news agency WAM.
According to the Minister, the UAE is presently pumping around 2.5 million barrels a day and that by the end of the year and beginning of next year some extra 200,000 barrels would be added to the production capacity per day. “Our output capacity will be expanded further in future since the UAE holds large hydrocarbon reserves,” he noted.
“Despite soaring prices in global markets, demand and supply indicators show that there is a surplus in supplies which resulted in large crude oil stocks in major consumer countries,” he said.
Failure of the global oil refinery sector to cope with the increasing global demand for oil exacerbated the situation and pushed the prices further. This problem might worsen in the future if it is not addressed now, he said.
Al Hamili pointed out that OPEC members currently produce 30.2 million barrels per a day and if this output continues, it would create a surplus of one million barrels a day by the end of the year.
