What OPEC says and what they really mean....
Posted: 21 Sep 2005, 15:44
Just found an obscure single column in the economics page of El Pais here in Spain telling me that Opec promises to release "all its reserves." What? Or as Manuel would say, Qu?? I went to Opec's web page and found what they really said. None the wiser, I found Der Spiegel also seemed to have had difficulties understanding them and here you have the news from Opec and their Public relations officer's 'clarification' which is as clear as crude. Then I find The Times gives me the answer. Let's tell Richard Branson he's wrong to sink millions into a refinery plant in Canada, we need that money in wind power and all those things G. Monbiot mentioned yesterday in the Guardian. Read on, if you can wade through Opec's 'officialspeak'
From OPEC.org
Having reviewed the current oil market, the Conference noted that action taken by OPEC Member Countries to increase production over the preceding quarters - OPEC production being currently estimated at 30.2 mb/d (excluding Iraq 28.3 mb/d) ? has led to a build-up in inventory levels, especially of crude, which now stand well above their five-year average, sufficient to ease concerns in the market about potential supply disruptions, such as those witnessed following Hurricane Katrina. The Conference further noted that Member Countries are implementing costly investment plans to accelerate the expansion of crude production capacity from about 32.5 mb/d to at least 38 mb/d by 2010, to meet future demand growth.
Acknowledging that, although growth in crude oil supply in recent years has continued to be ahead of growth in demand, and that commercial oil stocks, in particular of crude, are at comfortable levels, oil prices have nevertheless continued to rise, mainly on account of tightness in downstream capacity and concerns over availability of adequate future supplies leading to increasing activity in futures markets, the Conference reiterated that the Organization will continue its proactive policy of supporting market stability by ensuring availability of adequate supply, at prices reasonable to both producers and consumers.
Towards this end, and recognizing the importance of maintaining oil market stability, for the benefit of the world economy, including, in particular, the economies of the developing world, the Conference agreed to make available to the market the spare capacity of around 2mb/d in Member Countries, should it be called for, for a period of three months, starting 1 October 2005. The Conference further decided to review market developments at its 138th (Extraordinary) Meeting, to be held in Kuwait on 12 December 2005, and take decisions as deemed appropriate and necessary.
The Conference again acknowledged the important role of non-OPEC producers in the global oil industry, and repeated its call on non-OPEC oil producers to continue actively co-operating with OPEC in maintaining price and market stability. Similarly, the Conference again called on all parties concerned to join these efforts to maintain market stability, with reasonable prices consistent with robust economic growth, as well as steady revenue streams, for producing countries and the industry, conducive to the expansion of upstream and downstream capacity to meet rising international demand for oil and products.
Further, the Conference noted that, whilst assurances from OPEC of its commitment to meet supply shortfalls and its readiness to offer additional supplies to the market, should these be called for, as well as emergency response action taken by International Energy Agency (IEA) Member Countries to release petroleum stocks to overcome temporary refinery shutdowns in the aftermath of Hurricane Katrina, had provided welcome relief, the continuing shortage of appropriate refining capacity remains one of the main reasons behind recent oil price increases and price volatility. Applauding the growing recognition by consumer country governments of the serious refining capacity constraints, which could pose a threat to future market stability in the next few years, the Conference repeated its call on industry and consumer governments to urgently address the pressing issue of refining shortages and to take prompt action to facilitate and speed up refinery capacity expansion. OPEC Member Countries have taken the initiative ? on their own and in partnership with others ? to pursue and invest in downstream projects, but this remains the primary responsibility of the main consuming countries, and, without appropriate and timely measures on their part, volatility is likely to remain a feature of the market for some time.
The Conference welcomed recent actions taken by consuming countries to ease the burden of higher fuel prices on the final consumer. In this connection, the Conference also welcomed the continuation of consultations between OPEC and the IEA and noted the increasing effectiveness of the International Energy Forum (IEF) as a platform for global dialogue, as well as its leading role as overall coordinator of the important international joint oil data initiative (JODI), supported by six international organizations, including OPEC. In this context, the Conference reiterated its satisfaction with the on-going OPEC/EU Dialogue, and recorded its readiness to enter into similar dialogues with other regional and international bodies ? dialogue which must address all the issues of interest to all parties ? the Organization remaining committed to so enhancing and strengthening co-operative relations between producers and consumers.
Latest press releases
OPEC clarifies news report on 2mb/d production increaseOPEC Member Country Kuwait pledges US $500m aid package to USA, in wake of Hurricane KatrinaOPEC considers further measures to help ease problems caused by Hurricane KatrinaOPEC President sends US Energy Secretary condolences & assurance in the aftermath of KatrinaStatement by OPEC Conference President on the recent rising trend in oil prices
Archives
No 14/2005
Vienna, Austria - 11 September 2005
Our attention has been drawn to some newswire reports quoting from an interview to be published in the German magazine Der Spiegel, that OPEC plans to announce an increase of its Member Countries crude oil production by just under 2 million barrels per day at the next Conference, scheduled for September 19-20, attributing the statement to the Acting Secretary General, Dr Adnan Shihab-Eldin.
We wish to state that the above statement is incorrect and does not reflect what Dr Shihab-Eldin told the Der Spiegel. In response to a question about OPEC?s plans to increase production, Dr Shihab-Eldin had answered that Member Countries of the Organization still have sizeable remaining spare production capacity, currently just under 2 mb/d, around 1.5 mb/d of which is in the Kingdom of Saudi Arabia.
He had stated further that Saudi Arabia had indicated earlier that it stands ready to increase its oil production to replace any shortage in the crude oil market, following the shutdown of some US oil production in the Gulf of Mexico, in the wake of the destructive Hurricane Katrina. In this regard, Dr Shihab Eldin mentioned that several proposals to increase OPEC production have been advanced and supported in recent days by many OPEC Member Countries, as part of continued efforts of the Organization to ensure that the market remain well supplied, and that such proposals will be considered and decided upon during the forthcoming Ministerial Conference.
Omar Farouk Ibrahim,
Head PR and Information Department
September 16, 2005
AND FROM THE TIMES
Western refineries spurning sulphurous Saudi oil
By Carl Mortished, International Business Editor
SAUDI ARABIA is struggling to sell its crude oil despite record fuel prices and calls on the Kingdom to bring further supplies to the market.
Saudi Aramco, the state oil company, has been forced to offer ever-greater discounts to tempt refiners to buy its product, which is shunned for its high sulphur content.
The official selling price for Saudi oil for October delivery is currently set at a discount of more than $13 per barrel to US light crude which was yesterday selling for just under $65 per barrel.
Weak demand for Arab Light, the main Saudi crude blend, has forced the Kingdom to increase the discount from $10.45 in August to $13.40 in October.
Evidence of the weak demand for Arabian and other high sulphur crudes is likely to increase the tension between Opec leaders and Western governments over the cause of the high petrol prices.
Leo Drollas, of the Centre for Global Energy Studies, reckons that Saudi Arabia may not have cut its price far enough. ?Despite $60 oil, there is a lot of crude sloshing about in the market,? he said.
Refiners seeking to make high specification petrol and diesel tend to prefer low-sulphur crudes such as Brent or Nigeria?s Bonny Light.
Few refineries are able to convert more of the heavy sulphurous ?sour? crudes into petrol and most of those are in the United States. The damage caused by Hurricane Katrina has forced refiners to turn to light North Sea and US crude blends which are already in diminishing supply.
Crown Prince Sultan bin Abdul Aziz of Saudi Arabia yesterday blamed the recent surge in the oil price on a shortage of refining capacity. He repeated the Kingdom?s pledge to keep the market well supplied with crude but said: ?The current rise in oil prices does not stem from a shortage in crude oil supplies but is due to, as everyone knows, increased demand for products and a shortage in refining capacity.?
The Crown Prince?s comments are a rebuke to Gordon Brown, the UK Chancellor, who this week called on Opec to increase supplies as he defended the Government?s high fuel taxes.
Further evidence of a growing pool of oil-seeking buyers emerged as Opec reduced its forecast of growth in demand for oil. Hurricane Katrina and the high price of petrol are curbing growth in demand for oil, the cartel said.
The devastation to US refineries and distribution systems has cut American consumption while price pressure is curbing demand in China and the United States. Opec has sliced 100,000 barrels per day from its forecast of growth in crude demand this year.
Opec now expects demand to increase by 1.4 million bpd to 83.5 million bpd.
The continuing strength of the oil price in the face of rising stocks of crude is a puzzle for oil analysts. Some believe that the shortage of refined products is dragging the crude price upwards. Others point to speculative hedge funds which are convinced that the world?s energy market is making a shift towards a post-oil world.
Opec?s fifth consecutive cut in forecast demand provides further evidence of the disconnect between the tight market for fuels and the growing supply in the underlying crude oil market. The cartel is producing more than 30 million bpd and has increased its output by 4 million bpd over the past three years.
From OPEC.org
Having reviewed the current oil market, the Conference noted that action taken by OPEC Member Countries to increase production over the preceding quarters - OPEC production being currently estimated at 30.2 mb/d (excluding Iraq 28.3 mb/d) ? has led to a build-up in inventory levels, especially of crude, which now stand well above their five-year average, sufficient to ease concerns in the market about potential supply disruptions, such as those witnessed following Hurricane Katrina. The Conference further noted that Member Countries are implementing costly investment plans to accelerate the expansion of crude production capacity from about 32.5 mb/d to at least 38 mb/d by 2010, to meet future demand growth.
Acknowledging that, although growth in crude oil supply in recent years has continued to be ahead of growth in demand, and that commercial oil stocks, in particular of crude, are at comfortable levels, oil prices have nevertheless continued to rise, mainly on account of tightness in downstream capacity and concerns over availability of adequate future supplies leading to increasing activity in futures markets, the Conference reiterated that the Organization will continue its proactive policy of supporting market stability by ensuring availability of adequate supply, at prices reasonable to both producers and consumers.
Towards this end, and recognizing the importance of maintaining oil market stability, for the benefit of the world economy, including, in particular, the economies of the developing world, the Conference agreed to make available to the market the spare capacity of around 2mb/d in Member Countries, should it be called for, for a period of three months, starting 1 October 2005. The Conference further decided to review market developments at its 138th (Extraordinary) Meeting, to be held in Kuwait on 12 December 2005, and take decisions as deemed appropriate and necessary.
The Conference again acknowledged the important role of non-OPEC producers in the global oil industry, and repeated its call on non-OPEC oil producers to continue actively co-operating with OPEC in maintaining price and market stability. Similarly, the Conference again called on all parties concerned to join these efforts to maintain market stability, with reasonable prices consistent with robust economic growth, as well as steady revenue streams, for producing countries and the industry, conducive to the expansion of upstream and downstream capacity to meet rising international demand for oil and products.
Further, the Conference noted that, whilst assurances from OPEC of its commitment to meet supply shortfalls and its readiness to offer additional supplies to the market, should these be called for, as well as emergency response action taken by International Energy Agency (IEA) Member Countries to release petroleum stocks to overcome temporary refinery shutdowns in the aftermath of Hurricane Katrina, had provided welcome relief, the continuing shortage of appropriate refining capacity remains one of the main reasons behind recent oil price increases and price volatility. Applauding the growing recognition by consumer country governments of the serious refining capacity constraints, which could pose a threat to future market stability in the next few years, the Conference repeated its call on industry and consumer governments to urgently address the pressing issue of refining shortages and to take prompt action to facilitate and speed up refinery capacity expansion. OPEC Member Countries have taken the initiative ? on their own and in partnership with others ? to pursue and invest in downstream projects, but this remains the primary responsibility of the main consuming countries, and, without appropriate and timely measures on their part, volatility is likely to remain a feature of the market for some time.
The Conference welcomed recent actions taken by consuming countries to ease the burden of higher fuel prices on the final consumer. In this connection, the Conference also welcomed the continuation of consultations between OPEC and the IEA and noted the increasing effectiveness of the International Energy Forum (IEF) as a platform for global dialogue, as well as its leading role as overall coordinator of the important international joint oil data initiative (JODI), supported by six international organizations, including OPEC. In this context, the Conference reiterated its satisfaction with the on-going OPEC/EU Dialogue, and recorded its readiness to enter into similar dialogues with other regional and international bodies ? dialogue which must address all the issues of interest to all parties ? the Organization remaining committed to so enhancing and strengthening co-operative relations between producers and consumers.
Latest press releases
OPEC clarifies news report on 2mb/d production increaseOPEC Member Country Kuwait pledges US $500m aid package to USA, in wake of Hurricane KatrinaOPEC considers further measures to help ease problems caused by Hurricane KatrinaOPEC President sends US Energy Secretary condolences & assurance in the aftermath of KatrinaStatement by OPEC Conference President on the recent rising trend in oil prices
Archives
No 14/2005
Vienna, Austria - 11 September 2005
Our attention has been drawn to some newswire reports quoting from an interview to be published in the German magazine Der Spiegel, that OPEC plans to announce an increase of its Member Countries crude oil production by just under 2 million barrels per day at the next Conference, scheduled for September 19-20, attributing the statement to the Acting Secretary General, Dr Adnan Shihab-Eldin.
We wish to state that the above statement is incorrect and does not reflect what Dr Shihab-Eldin told the Der Spiegel. In response to a question about OPEC?s plans to increase production, Dr Shihab-Eldin had answered that Member Countries of the Organization still have sizeable remaining spare production capacity, currently just under 2 mb/d, around 1.5 mb/d of which is in the Kingdom of Saudi Arabia.
He had stated further that Saudi Arabia had indicated earlier that it stands ready to increase its oil production to replace any shortage in the crude oil market, following the shutdown of some US oil production in the Gulf of Mexico, in the wake of the destructive Hurricane Katrina. In this regard, Dr Shihab Eldin mentioned that several proposals to increase OPEC production have been advanced and supported in recent days by many OPEC Member Countries, as part of continued efforts of the Organization to ensure that the market remain well supplied, and that such proposals will be considered and decided upon during the forthcoming Ministerial Conference.
Omar Farouk Ibrahim,
Head PR and Information Department
September 16, 2005
AND FROM THE TIMES
Western refineries spurning sulphurous Saudi oil
By Carl Mortished, International Business Editor
SAUDI ARABIA is struggling to sell its crude oil despite record fuel prices and calls on the Kingdom to bring further supplies to the market.
Saudi Aramco, the state oil company, has been forced to offer ever-greater discounts to tempt refiners to buy its product, which is shunned for its high sulphur content.
The official selling price for Saudi oil for October delivery is currently set at a discount of more than $13 per barrel to US light crude which was yesterday selling for just under $65 per barrel.
Weak demand for Arab Light, the main Saudi crude blend, has forced the Kingdom to increase the discount from $10.45 in August to $13.40 in October.
Evidence of the weak demand for Arabian and other high sulphur crudes is likely to increase the tension between Opec leaders and Western governments over the cause of the high petrol prices.
Leo Drollas, of the Centre for Global Energy Studies, reckons that Saudi Arabia may not have cut its price far enough. ?Despite $60 oil, there is a lot of crude sloshing about in the market,? he said.
Refiners seeking to make high specification petrol and diesel tend to prefer low-sulphur crudes such as Brent or Nigeria?s Bonny Light.
Few refineries are able to convert more of the heavy sulphurous ?sour? crudes into petrol and most of those are in the United States. The damage caused by Hurricane Katrina has forced refiners to turn to light North Sea and US crude blends which are already in diminishing supply.
Crown Prince Sultan bin Abdul Aziz of Saudi Arabia yesterday blamed the recent surge in the oil price on a shortage of refining capacity. He repeated the Kingdom?s pledge to keep the market well supplied with crude but said: ?The current rise in oil prices does not stem from a shortage in crude oil supplies but is due to, as everyone knows, increased demand for products and a shortage in refining capacity.?
The Crown Prince?s comments are a rebuke to Gordon Brown, the UK Chancellor, who this week called on Opec to increase supplies as he defended the Government?s high fuel taxes.
Further evidence of a growing pool of oil-seeking buyers emerged as Opec reduced its forecast of growth in demand for oil. Hurricane Katrina and the high price of petrol are curbing growth in demand for oil, the cartel said.
The devastation to US refineries and distribution systems has cut American consumption while price pressure is curbing demand in China and the United States. Opec has sliced 100,000 barrels per day from its forecast of growth in crude demand this year.
Opec now expects demand to increase by 1.4 million bpd to 83.5 million bpd.
The continuing strength of the oil price in the face of rising stocks of crude is a puzzle for oil analysts. Some believe that the shortage of refined products is dragging the crude price upwards. Others point to speculative hedge funds which are convinced that the world?s energy market is making a shift towards a post-oil world.
Opec?s fifth consecutive cut in forecast demand provides further evidence of the disconnect between the tight market for fuels and the growing supply in the underlying crude oil market. The cartel is producing more than 30 million bpd and has increased its output by 4 million bpd over the past three years.