Iraqi Oil Minister: More OPEC Cutbacks Possible
Iraq's oil minister said Tuesday that OPEC is "of course" weighing fresh output cuts to prop up prices, and, also underscored his government's expectation that contractors start work quickly or risk losing lucrative oil deals.
In explaining the need for potential new OPEC cutbacks, Hussain al-Shahristani said current crude prices don't provide "sufficient incentives" for investors to put money into new projects. That, he warned, could set the stage for a shortfall in production capacity once the global economy recovers.
"At $40 per barrel, very few investors will be willing to invest in developing oil fields," al-Shahristani told reporters on the sidelines of a conference in the Qatari capital. "And that's going to create a big shortage in the world supply, which is not healthy."
The 12-nation Organization of Petroleum Exporting Countries is due to meet at its headquarters in Vienna, Austria, on March 15. Some of its members, including Iraq, have been forced to shrink their budgets or run deficits because of the steep drop in oil prices.
Al-Shahristani said OPEC is in talks with "producers, companies and organizations" to determine how to raise prices to levels that would support investment in new fields.
The bloc intends to revise its demand forecasts for the latter half of the year and re-examine production levels by non-OPEC producers, he added.
"If demand is going to slide down, as it has done, then obviously you need to cut production," he said. "Because there are no buyers for it."
OPEC members have already agreed to slash daily production by 4.2 million barrels from September levels to halt a slide that has seen prices plummet by nearly three-quarters from their summer highs.
The group, which produces about 40 percent of the world's oil, said last week it has completed about 80 percent of those previously agreed cutbacks.
Al-Shahristani clarified Iraq's expectation that oil companies have six months after signing contracts to begin operations -- a policy some observers have suggested could be tough to meet given existing security and economic realities.
"What we are asking oil companies, once we sign a contract with them, is to start working within six months, not to finish their projects," he said in response to a question.
"We think with the improved security situation, many companies are willing to come and start working. And as a matter of fact, some of them have already started," he said, citing recently signed deals with state-run China National Petroleum Corp. and Royal Dutch Shell PLC as examples.
Al-Shahristani was in Doha for a meeting of the Extractive Industries Transparency Initiative, a group that encourages openness in dealings between resource companies and oil, gas and mineral producing nations.
Qatar's delegate to OPEC, who spoke at the same conference, declined to discuss issues related to oil when asked Tuesday.
However, another senior oil and gas official, Minister of State for Energy and Industry Affairs Mohammed Saleh al-Sada, said over the weekend that OPEC "will not be hesitant" to cut output further, and called $70 a barrel a "reasonable price" for oil.
Source: www.manufacturing.net/
In explaining the need for potential new OPEC cutbacks, Hussain al-Shahristani said current crude prices don't provide "sufficient incentives" for investors to put money into new projects. That, he warned, could set the stage for a shortfall in production capacity once the global economy recovers.
"At $40 per barrel, very few investors will be willing to invest in developing oil fields," al-Shahristani told reporters on the sidelines of a conference in the Qatari capital. "And that's going to create a big shortage in the world supply, which is not healthy."
The 12-nation Organization of Petroleum Exporting Countries is due to meet at its headquarters in Vienna, Austria, on March 15. Some of its members, including Iraq, have been forced to shrink their budgets or run deficits because of the steep drop in oil prices.
Al-Shahristani said OPEC is in talks with "producers, companies and organizations" to determine how to raise prices to levels that would support investment in new fields.
The bloc intends to revise its demand forecasts for the latter half of the year and re-examine production levels by non-OPEC producers, he added.
"If demand is going to slide down, as it has done, then obviously you need to cut production," he said. "Because there are no buyers for it."
OPEC members have already agreed to slash daily production by 4.2 million barrels from September levels to halt a slide that has seen prices plummet by nearly three-quarters from their summer highs.
The group, which produces about 40 percent of the world's oil, said last week it has completed about 80 percent of those previously agreed cutbacks.
Al-Shahristani clarified Iraq's expectation that oil companies have six months after signing contracts to begin operations -- a policy some observers have suggested could be tough to meet given existing security and economic realities.
"What we are asking oil companies, once we sign a contract with them, is to start working within six months, not to finish their projects," he said in response to a question.
"We think with the improved security situation, many companies are willing to come and start working. And as a matter of fact, some of them have already started," he said, citing recently signed deals with state-run China National Petroleum Corp. and Royal Dutch Shell PLC as examples.
Al-Shahristani was in Doha for a meeting of the Extractive Industries Transparency Initiative, a group that encourages openness in dealings between resource companies and oil, gas and mineral producing nations.
Qatar's delegate to OPEC, who spoke at the same conference, declined to discuss issues related to oil when asked Tuesday.
However, another senior oil and gas official, Minister of State for Energy and Industry Affairs Mohammed Saleh al-Sada, said over the weekend that OPEC "will not be hesitant" to cut output further, and called $70 a barrel a "reasonable price" for oil.
Source: www.manufacturing.net/
posted by B2B India @ 10:46 PM
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