IEA's Mandil says oil prices 'extremely harmful' to economy

Paris (Platts)--7Sep2005

International Energy Agency member countries in Europe will release a
total of 600,000 b/d of crude and products from strategic stockpiles in a
matter of days in response to supply shortages, the IEA's chief executive
Claude Mandil told Platts in a telephone interview Wednesday.

     "For Europe, there are 600,000 b/d of crude with only 80,000 b/d of crude
so 520,000 b/d are in products, mainly gasoline and diesel," Mandil said.
     Mandil, who said the Paris-based agency hoped to publish a list of
member countries' contributions later Wednesday, said most member nations had
adopted a response measure by drawing down stocks while "very few" countries,
Australia and Canada, had opted for demand restraint. "This is very good too
as it means less oil consumed, in particular less gasoline on the local
market," Mandil said.

    Australia earlier this week said it was meeting its obligation to
contribute just under 36,000 b/d by reducing its consumption. Typically, the
co-ordinated emergency response measures (CERM) adopted by net-importer
countries include stockdraw, demand restraint, fuel switching options and
potential increase of domestic output.

    Mandil said the organization's member countries will start releasing oil
from strategic stockpiles in a matter of days. Germany, Europe's largest fuel
market, said earlier Wednesday it is releasing 300,000 mt of gasoline and
145,000 mt of gasoil from storage starting today. 

    "The treaty provides that, after the activation plan has been made, it has
to be implemented within 15 days. That, this time, will be much earlier," he
said.

     The IEA, which advises industrialized countries on energy, last Friday
said the stock release, supported the EU, would see 60-mil bbl released
collectively by all 26 of its member countries. The decision marks the first
time IEA members have tapped their emergency oil stocks in 15 years.

        Mandil said the agency will convene a meeting of its governing board
in 15 days' time to assess the impact of the stock release but said a decision
on whether to call for a further stock release would not be based on prices
but on an assessment of a supply shortage. 

     "We don't have prices as a target. The metric of success is to avoid a
supply disruption....but of course we are happy to see prices going down but
as a side-effect," he said. "At the governing board meeting next week, we will
not take additional decisions because of  prices, we will tell them we have an
assessment of the actual shortfall," he added.

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