World has ample oil reserves to meet demand for decades

World has ample oil reserves to meet demand for decades
JEDDAH

Monday, June 23, 2008

Oil summit calls for greater transparency, more investment

SAUDI Oil Minister Ali al-Nuaimi said yesterday the world has enough crude to last for "many decades" and that his country will invest massively to be able to produce 15 million barrels a day.

This came as the Jeddah energy summit, convened to address rocketing oil prices, yesterday called for greater transparency and regulation in dealing and more investment in production.

The summit's final communique came amid accusations by oil producers that "speculators" are playing a key role in the dramatic rise in crude prices that earlier this month hit a record close to US$140 per barrel.

"Participants noted with concern that oil prices have risen sharply and become more hostile due to a host of factors," said the closing statement from the high-profile meeting of major oil powers and consumers in this Saudi city.

"Participants agreed that the situation requires concerted efforts from all parties producing and consuming countries to bring stability to the international oil market for the benefit of all," it added.

Leaders and ministers from the 36 nations agreed to recognise that "the transparency and regulation of financial markets should be improved through measures to capture more data on index fund activity and to examine cross-exchange interactions in the crude market."

The statement also appealed for increased investment in crude production to ensure markets have sufficient supplies.

"The existence of spare capacity throughout the chain is important for the stability of the global oil market," it said.

"Hence, an appropriate increase in investment, both upstream and downstream, is necessary to ensure that the markets are well supplied in a timely and adequate manner."

Saudi Arabia's Nuaimi told the summit, "The world has enough petroleum reserves, both conventional and non-conventional, to meet oil demand for many, many decades to come.

"Concerns over long-term supply shortages seem to be playing a role in strong futures prices, though I believe these concerns are badly misplaced," Nuaimi added.

In contrast, US Energy Secretary Samuel Bodman told the meeting that "production had not kept pace with growing demand for oil, resulting in increasing in increasingly volatile prices."

Nuaimi said Saudi Arabia's production capacity will rise to 12.5 million barrels per day (bpd) by the end of 2009 and another 2.5 million bpd could be added if demand warranted.

Projects under way will see "the kingdom's maximum sustained production capacity rise to 12.5 million bpd by the end of next year," he said. It currently has output capacity of 11.3 million bpd.

"In addition, we have identified a series of future crude mega increments totalling another 2.5 million bpd of capacity that could be built if and when crude oil demand warrants their development," the minister said.

The projects include a 900,000 bpd boost in Zuluf, 700,000 bpd in Safaniya, 300,000 bpd each in Berri and Khurais and 250,000 bpd in Shaybah, Nuaimi said. AFP