OPEC set to ignore the US and leave oil output unchanged
December 27th, 2010 at 06:36pm Under OPEC
OPEC set to ignore the US and leave oil output unchanged
Article by Fat Prophets
Bloomberg reports that OPEC oil nations plan to ignore U.S. calls to increase production as crude prices remain stuck above US a barrel, according to a draft of the group’s statement to be released this weekend.
The group will instead reiterate a commitment to ensure energy supply and seek to reduce their carbon emissions released from pumping and refining oil and gas, according to the statement to be issued in Riyadh. The statement was seen by Bloomberg and confirmed by three officials from the group who spoke on the condition of anonymity.
Their intention to keep production at current levels signals consumers are unlikely to see relief from high oil prices, which reached a record US.62 a barrel on Nov. 7 in New York.
Saudi Oil Minister Ali al-Naimi and his counterparts from Qatar and Algeria have said this week that the group won’t decide on production quotas at the Nov. 17-18 heads of state summit in Riyadh and will instead take up the matter at a Dec. 5 meeting in Abu Dhabi.
U.S. Energy Secretary Samuel Bodman said two days ago in Rome that he met OPEC officials and asked them to consider raising production further.
“OPEC shouldn’t be blamed for the price of oil, it’s out of our hands,” said Qatari Oil Minister Abdullah bin Hamad al-Attiyah. “It’s speculators who are putting money in oil.”
The Organization of Petroleum Exporting Countries should be wary about the impact of near-record crude prices on consumption after demand from power stations was sapped by high price levels in the 1970s, the group’s president, Mohamed al-Hamli, said this week.
“High prices so far have limited impact on demand, however we can’t remain complacent, this high price is potentially dangerous,” said al-Hamli, who is also the oil minister of the United Arab Emirates.
The heads of state summit is only the third since OPEC was founded in 1960. Algeria’s Chakib Khelil will take over as OPEC president in 2008.
OPEC has proposed a US billion fund for research and development of carbon emission sequestration technology, Ivo de Boer, executive secretary of the United Nations Framework on Climate Change, told a press conference in Riyadh. Under the proposal, OPEC would contribute US billion to the fund, industrialized nations US billion and developing countries US billion, he said. “I doubt that developing countries will support it.”
OPEC Secretary General Abdalla el-Badri declined to confirm the investment figure. “OPEC will contribute its part to research in this respect,” he said. “The heads of state will discuss the environment, it will be a positive statement.”
The share of fossil fuels — oil, gas and coal — will rise to 82% in 2030 from 81% in 2005, according to the International Energy Agency. Global energy demand will rise by about 1.8% a year, with consumption growing fastest in developing countries, such as China and India.
Should consuming countries adopt policies to reduce consumption and combat climate change, the fossil-fuel share could drop to 76% by 2030, according to an alternative projection by the IEA, meaning slower growth in demand for OPEC’s oil.
“Since fossil fuels are going to be around for some time, we need to develop technology to reduce” carbon emissions, al-Naimi said in Riyadh. “We are all called upon to address the climate-change concern and find a balance that is a possible, comprehensive and cost-effective solution.”
“The technology is available to reduce emissions and Saudi Arabia is willing to participate,” he said.”
High oil prices are already damaging demand in some industrialized nations, according to the Paris-based IEA, which this week cut its forecasts for fourth-quarter world consumption for a third time since August. Gasoline pump prices in the U.S. are above US a gallon.
Collectively, OPEC’s 12 members pump more than 40% of the world’s oil and will spend some US0 billion by 2015 on new projects, OPEC’s el-Badri said yesterday.
Ecuador is expected to formally rejoin OPEC this weekend, expanding the group’s membership to 13 countries.
The producers’ club is gaining influence on the back of high prices. Importing nations have transferred an additional US trillion to OPEC than they otherwise would have since 2001 had oil prices stayed near a barrel, according to Goldman Sachs Group.
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