JEDDAH: Minister of Petroleum and Mineral Resources Ali Al-Naimi announced yesterday that Saudi Arabia would increase its daily output to 9.7 million barrels next month, pumping an extra 200,000 barrels to world markets.
UN Secretary-General Ban Ki-moon said last Sunday that the Saudi minister had told him the plan to increase production by 200,000 bpd. “He quoted me right, that’s old news now,” Al-Naimi told reporters in Jeddah. Asked if Saudi Arabia would increase output more than that figure, Al-Naimi said: “We’ll be giving out new information within the next two days.” He was apparently referring to the International Energy Conference that opens at Jeddah Hilton tomorrow.
In addition to members of the Organization of Petroleum Exporting Countries (OPEC), leading non-OPEC producers such as Russia, Norway, Mexico and Brazil as well as major consumers like the United States, Britain, Germany, France, Japan, China, India and South Africa will be attending the conference.
“The conference will discuss the situation in the international oil market and how producers, consumers, oil companies and international organizations can cooperate to deal with unjustifiable hike in prices and propose suitable solutions,” an official statement said, reiterating the Kingdom’s concern over increasing oil prices. The statement emphasized Saudi Arabia’s plan to invest about $90 billion in oil and gas projects during the next four years to increase production capacity and improve refining facilities. The new projects would further increase the Kingdom’s oil output to 12.5 million bpd by 2009. OPEC President Chakib Khelil, who will attend the Jeddah oil summit, said yesterday it was illogical and irrational to ask the organization to increase output so as to take the pressure off soaring prices. “Saudi Arabia decided to hold this meeting...in order to determine the causes behind rising oil prices,” he said.
The Jeddah meeting comes only days after oil prices jumped to new record highs just short of $140 per barrel, sparking fresh concerns that soaring energy costs will both stoke inflation and depress the global economy.
Khelil said that just because computer or car prices were high, “would one ask their producers to make more?”, insisting again that oil was being driven higher by factors other than supply alone — most notably speculation and a falling dollar.
He also noted that high tax levies on fuel in some countries such as France and Britain were also to blame, with all these issues to be discussed at the Jeddah meeting. OPEC pumps about 40 percent of the world’s oil supply.
Iran, a major OPEC producer, said increased oil output would not be able to bring down skyrocketing prices. “Increased oil production does not have such an impact that it would decrease prices because enough oil exists in the global market,” Iranian Oil Minister Gholam Hossein Nozari was quoted as saying by the Mehr news agency. “Just compare 300,000 (barrels per day) with about 86 million (bpd), which are the market’s need! What would be the effect?” Nozari asked rhetorically.
German Economy Minister Michael Glos, meanwhile, called for closer cooperation between oil producers and consumers to curb prices. “The increase in oil prices amounts to transfer of wealth from oil importing countries. This has powerful effects on the global economy,” he said and stressed the need for more energy efficiency, more investment in energy and the right energy mix including atomic power.
— With input from agencies
