- Title: AUSTRIA: OPEC HESITATES OVER OIL CAPACITY AS PRICE SLIDES
- Date: 18th September 2005
- Summary: (W5) VIENNA, AUSTRIA ( SEPTEMBER 18) (REUTERS) 1. EXTERIOR OF BUILDING WHERE THE ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES IS MEETING 2. OPEC PRESIDENT, KUWAITI OIL MINISTER SHEIKH AHMAD AL-FAHD AL-SABAH SITTING DOWN 3. (SOUNDBITE) (Arabic) KUWAITI OIL MINISTER SHEIKH AHMAD AL-FAHD AL-SABAH SAYING: "Everyone knows that OPEC has two million barrels a day of extra capacity. Therefore we have two choices. Either we increase the (production) ceiling by 500,000 (barrels a day) or one million (barrels a day), or through (saying) that we are ready to supply the market if the need arises using those two million (barrels a day of extra capacity). We want to affirm to everyone that OPEC has extra capacity of two million (barrels a day) and we are willing to offer it to the markets and to buyers to help stabilise markets." 4. MINISTERS HANDS 5. (SOUNDBITE) (Arabic) KUWAITI OIL MINISTER SHEIKH AHMAD AL-FAHD AL-SABAH SAYING: "We are trying hard to come out with a positive formulation that will stabilise and reassure markets regarding the continuity of supplying them with crude oils and we are working to calm prices, which have started to negatively affect world economic growth, albeit to a small extent, as well as affecting the development plans of the developing countries." 6. REPORTERS IN HOTEL CORRIDOR 7. (SOUNDBITE) (English) LIBYAN ENERGY MINISTER, FATHI OMAR BIN SHATWAN, SAYING: "If anybody wants any quantity of crude oil we can supply him right away. For example, if you add another one million nobody will buy it on the market, because the market is already well supplied. So, the problem is not a problem of crude oil, it is a problem of products. We have a problem of shortages in refining capacities. That is why people should invest in the downstream and solve the problem." 8. LIBIYAN OIL MINISTER STANDING IN HOTEL LOBBY SURROUNDED BY REPORTERS 9. (SOUNDBITE) (English) EUROPEAN UNION ENERGY COMMISSIONER ANDRIS PIEBALGS ANSWERING REPORTERS QUESTION: Are these prices influencing EU economies? ANDRIS PIEBALGS SAYING: "They are definitely having some influence. In the bigger EU member states they are slowing down the growth." REPORTER ASKING: What are they (OPEC) going to decide, do you know? ANDRIS PIEBALGS SAYING: "You should ask them, whatever they decide." 10. REPORTERS OUTSIDE HOTEL 2.26 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 3rd October 2005 13:00
- Keywords:
- Location: VIENNA, AUSTRIA
- Country: Austria
- Reuters ID: LVA8TGB1TVRAE7U0XPIC907198C9
- Story Text: OPEC hesitates over more oil as price slides.
OPEC oil producers on Sunday (September 18) wavered over a supply increase that would aim to allay consumer country concerns
about energy security after Hurricane Katrina pushed crude over $70 a barrel.
Under pressure from importing nations, the Organization of the
Petroleum Exporting Countries (OPEC) begins a two-day meeting on Monday
(September 19) that could lift output just as fuel demand starts to buckle under the impact of high prices.
U.S. crude has fallen from a record $70.85 a barrel in the three weeks since Katrina tore into U.S. Gulf refineries, losing $1.75 on Friday to close at $63.
OPEC President Sheikh Ahmad al-Sabah said in Vienna that OPEC had two choices:
"Either we increase the (production) ceiling by 500,000 (barrels a
day) or one million (barrels a day), or through (saying) that we are ready to supply the market if the need arises using those two million (barrels a day of extra capacity). We want to affirm to everyone that OPEC has extra capacity of two million (barrels a day) and we are willing to offer it to the markets and to buyers to help stabilise markets," he said.
He met on Sunday with European Union Energy Commissioner Andris
Piebalgs to stress that OPEC wanted to prevent inflated energy costs slowing the global economy.
"We are trying hard to come out with a positive formulation that
will stabilise and reassure markets regarding the continuity of supplying them with crude oils and we are working to calm prices, which have started to negatively affect world economic growth, albeit to a small extent, as well as affecting the development plans of the developing countries," the OPEC president said.
Ministers are discussing raising output by 500,000 or 1 million barrels a day. But a third option was gaining ground that would see production left unchanged with a vow to release spare capacity when the market can absorb it.
Some said they were reluctant to sanction additional crude when global refining is too stretched to process more.
"If anybody wants any quantity of crude oil we can supply him
right away. For example, if you add another one million nobody will buy it on the market, because the market is already well supplied. So, the problem is not a problem of crude oil, it is a problem of products. We have a problem of shortages in refining capacities. That is why people should invest in the downstream and solve the problem," said the Libyan Energy Minister, Fathi Omar Bin Shatwan.
With nearly 900,000 bpd of U.S. refining still shut after Katrina the only producer able to pump more, Saudi Arabia, cannot find buyers.
OPEC does not appear too concerned yet about forecasts that cut demand growth projections for the rest of 2005 and 2006.
The impact of high retail gasoline prices combined with a sharp
slowdown in Chinese demand growth and the knock-on effect of Katrina on U.S. economic activity means slower fuel demand growth.
The International Energy Agency (IEA), adviser on energy to 26
industrialised nations, recently sliced its forecast for world demand growth this year to 1.35 million bpd after 2.9 million bpd of growth in 2004.
While the perception among some consumer countries is that OPEC has
starved the world of crude, IEA figures show the cartel has come close to matching the pace of demand growth, even before extra non-OPEC oil.
The IEA says that from 2002 to 2005 global demand has risen 5.8 million bpd while OPEC, assuming steady output for the remainder of this year, has added 5.6 million bpd of supply.
Non-OPEC producers led by Russia, have pumped an additional 2.5 million bpd since 2002.
That means global crude supplies have risen 10.5 percent over the past 3 years, outweighing the 7.5 percent of demand growth over that period by 2.3 million bpd.
Refinery capacity though has not matched demand growth, rising by just 0.5-1.1 percent per annum worldwide since 2000, according to oil major BP, causing supply bottlenecks in consumer countries.
Some in OPEC worry it may go too far in trying to calm consumer country concerns.
OPEC experts in a report for ministers calculate the call for cartel crude in the fourth quarter 2005 at 30.3 million bpd, in line with output now of 30.2 million.
That would mean only a minor stockdraw of 100,000 bpd in the fourth
quarter during the winter period when inventories normally draw heavily.
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