Oil producers 'to invest billions of dollars'
Volatility in the global oil market is unlikely to affect oil-producing countries’ plans to invest billions of dollars to boost capacity, Saudi Arabia’s oil minister said today.
Ali Naimi’s comments came a day after he said he didn’t see any need as of now for the 12-nation Organisation of Petroleum Exporting Countries (Opec) to discuss new cuts in output, a remark that pushed crude oil prices to 19-month lows.
The losses continued today with the February contract for light sweet crude hitting $51.17 in electronic trading on the New York Mercantile Exchange.
Despite the falling prices, which appeared to be more of the price swings seen on oil markets throughout 2006, Naimi said Opec members would push ahead with plans to invest billions of dollars to boost capacity so they could meet growing demand, especially from Asian economic powerhouses India and China.
“Producers in general are not moved by a price movement today, tomorrow or next month. We look at the long future,” he told reporters in New Delhi, where he was attending an international energy conference. Saudi Arabia is Opec’s biggest producer.
“We recognise that there is economic growth happening in the world. Therefore we know the demand is going to grow for energy,” he said. “Fossil fuel is the primary source of energy and therefore investment in that business is very prudent.”
Naimi also said he hoped there would be fewer geopolitical upheavals that could affect oil prices in future. He didn’t elaborate, but his remark appeared to refer to the war in Iraq and other problems in the Middle East.
Instability in the Middle East last year helped push oil prices to an all time high of $78.40 a barrel in July before falling on predictions of a warm winter in the US, a key market for heating fuel.
Prices were considerably lower than the all time high at the end of the year, and since January 1 have fallen another 16%.
Some Opec members have been pushing for further cuts in production to keep global prices from falling further.
On Monday, Venezuela’s energy and mines minister Rafael Ramirez said his country favours an emergency Opec meeting ahead of its scheduled gathering in March and that some members backed this idea.
Naimi said yesterday that he didn’t see the need for new cuts past what they already agreed upon late last year. Opec said then it would cut production by 1.2 million barrels from November, and then cut another 500,000 barrels a day from February 1.
