DOHA, 23 April 2006 — Chief executives of the world’s top oil firms met ministers from the biggest producers and consumers yesterday as record crude prices of above $75 a barrel added urgency to consumers’ calls for more supply investment.
A four-year rally, fueled by disruptions from the oil field to the refinery gate, has led to bumper profits for ExxonMobil , Royal Dutch Shell and BP and billions of dollars in oil revenues for producers.
But consumers — from the world’s largest energy user the United States to the developing economies of Africa — feel vulnerable. Worries over Iran’s exports and crises in Iraq and Nigeria have pushed oil to levels that threaten economic growth. “I expect in the medium term, two to three years, oil prices will remain high,” Paulo Scaroni, chief executive of Italy’s ENI, told reporters.
The talks with business leaders will fill the first day of three days of consumer-producer discussions aimed at steering oil away from its inflation-adjusted high of above $80 a barrel, touched in 1980, the year after the Iranian revolution.
Chief executives of ExxonMobil, BP, Shell, Chevron and Occidental were among those at the talks which run from April 22 to 24, along with Total’s exploration and production head.
Government ministers from 65 countries, including top consumer the United States and OPEC producers, were also here. Few expect agreement on how to tackle high fuel costs.
Consumer governments are urging international oil companies to spend more on producing and refining oil and they want major exporters like Saudi Arabia to lift barriers to investment. “(The price) is a lot to do with psychology and not much to do with fundamentals,” said Jeroen van der Veer, chief executive of Royal Dutch Shell. “There is no demand unmet in the world.”
Irked members of the Organization of the Petroleum Exporting Countries point out that they have raised oil output by more than 10 percent over the past six years. Top exporter Saudi Arabia is spending billions of dollars on new oil fields.
Some OPEC delegates here say US foreign policy is partly responsible for today’s record prices. Libya’s top oil official Shokri Ghanem said fears of US military action against Iran, the world’s fourth biggest crude exporter, had added up to $15 to the cost of a barrel of oil.
Other producers blame a lack of planning in consumer nations, particularly the United States, which uses a quarter of the world’s oil and over 40 percent of its gasoline but has not built a new refinery on its soil for decades.
The planned introduction of new, cleaner gasoline in the United States this summer may lead to short-term supply disruptions, US Energy Secretary Sam Bodman said on Friday.
He will have an opportunity to answer the United States’ critics when he arrives in Doha later this weekend. “We are worried about supply in general throughout the world and particularly of gasoline and particularly in the United States,” Fatih Birol, chief economist of the International Energy Agency, told Reuters.
Consumers’ calls for more spending to satisfy consumption would stand a better chance of being met if multinationals and the nations straddling the world’s reserves worked together - something major oil firms are beginning to recognize.
