Badri says OPEC to add 21 million b/d new oil capacity
Dubai (Platts)--20Sep2011/730 am EDT/1130 GMT
OPEC countries plan to bring on stream a total of 21 million b/d of
new oil capacity over the next five years, the organization's
secretary-general Abdalla el-Badri said Tuesday.
"Now we have investment of $312 billion for five years to add more to
the supply, about 21 million b/d gross," Badri told reporters in Dubai.
The official said OPEC saw that oil demand was falling, but that the
deterioration was gradual.
"We think demand is coming down, but not that much. We have to wait and
see what will happen in the next two or three months in the world
economy and also for world [oil] demand," he said.
"I'm not seeing a big problem that might require an emergency meeting
for OPEC. There are a lot of problems in the world economy, but any
effects will come progressively. They will not come all at once," he
said.
Badri said OPEC may discuss the issue of Libyan oil output at its next
scheduled meeting in December if the country is producing "meaningful"
volumes by that time.
OPEC member Libya saw its oil output fall from around 1.6 million b/d to
almost zero this year following the uprising against the regime of
Moammar Qadhafi.
Earlier this month, the country restarted some production and a Libyan
oil official said Saturday that the country was producing around 150,000
b/d.
On Monday, Badri said OPEC countries would accommodate Libya's return to
the international oil market by cutting their own output.
Badri declined to comment on the likelihood of OPEC ministers agreeing
in December to reduce the group's total output. He said he expected the
call on OPEC crude to stay around 30 million b/d for the rest of 2011.
UNCERTAINTY
Nonetheless, the European debt crisis, stubbornly high US unemployment
and an expected slowing of the Chinese economy as Beijing seeks to
control inflation are all creating uncertainty for the group that
controls 40% of global oil supply and about 60% of proved reserves.
Badri called Monday for greater transparency over demand on the part of
major oil consuming countries, especially China. He said that was
necessary to enable OPEC members to plan large capital outlays required
to develop new oil supplies.
The OPEC secretariat's current five-year projection of capital spending
by OPEC members includes its expectations for Iraqi investment in oil
development, he said Tuesday.
Baghdad is pursuing an aggressive program to boost production capacity.
Badri said OPEC might need to discuss the eventual return of Iraq to the
group's quota system by the end of 2012. That timeline, however, was
only an "estimate," he stressed.
Iraq has remained outside OPEC's collective crude production agreements
since its invasion of Kuwait in 1990.
The secretary-general declined to comment on whether Libya would be
granted an OPEC quota exemption to aid reconstruction efforts. That
would be up to the group's ministerial congress, he said.
TNC RECOGNITION Badri said he expected the ministers to respect the
recent UN decision to recognize Libya's Transitional National Council as
the country's legitimate interim government as one that should apply to
OPEC as an international organization, minimizing potential conflict
among the group's members at the December meeting.
Three OPEC members--Angola, Ecuador and Venezuela--recently voted in
favor of a defeated UN resolution brought by Angola to defer recognition
of the TNC. OPEC members Saudi Arabia and Algeria abstained.
Badri also declined to comment on whether he was comfortable with
current oil prices and whether $75/barrel was still regarded as a fair
oil price for producers and consumer.
He observed that the average cost worldwide for producing crude had
risen by about 230% since 2009.
Badri, a former head of Libya's National Oil Corporation, told reporters
Tuesday he was not interested in running for political office in his
home country but would advise the new government on the reconstruction
of Libya's oil sector if asked.
He said technically competent young Libyans, many of whom were at the
forefront of the revolution, should take the lead in rebuilding the
country and its oil sector.
--Tamsin Carlisle,
tamsin_carlisle@platts.com
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