World
Institutional
links
Welcome back on
26 -29 August,
ONS 2008
ONS 2008:
Press sees Norway
from toe to tip
Petroleumworld
Business
Partners:
Centre for
Global Energy
Studies
Blogspots
The Energy Guide
to Venezuela
By Venezuelan British
Chamber of Commer
  |
IEA's Tanaka urges OPEC to take 'close look at the market'
SINGAPORE
Petroleumworld.com, November 26, 2008OPEC should "look at the market closely" before deciding on a production target at its upcoming meetings, Nobuo Tanaka, executive director of the International Energy Agency, said Wednesday.
OPEC output in October was higher than the IEA's latest estimate of call on OPEC crude, "so it is understandable that they are adjusting their production level," Tanaka told Platts in an interview.
"But at the same time, they have to watch carefully what the market situation is." In its latest monthly oil market report released November 13, the Paris-based energy policy adviser to 28 OECD countries cut its call on OPEC crude for the fourth quarter to 31.1 million b/d, 600,000 b/d less than previously estimated, and around 1 million b/d below the group's estimated October production of 32.13 million b/d.
While acknowledging that OECD oil stock levels were now at "very good levels," Tanaka said a severe winter could boost demand and accidental supply shortages and geopolitical risks were also factors OPEC needed to take into consideration.
"We want OPEC countries to see the market situation very closely and react [to] it if necessary," Tanaka said.
In view of the continuing slide in oil prices, some OPEC members have called for a second round of output cuts ahead of the group's "consultative" meeting in Cairo, Egypt, on Saturday, November 29 and a ministerial meeting in Oran, Algeria on December 17.
At the meeting in Egypt, the cartel is expected to discuss further cutbacks as well as take stock of compliance with its October 24 agreement to reduce production by 1.5 million b/d to a new ceiling of 27.308 million b/d for 11 members.
It was important to "wait and see" individual OPEC member countries' compliance with their new production quotas in November before taking any further decisions on production targets, Tanaka said.
URGES OPEC TO CONTINUE PLANNED INVESTMENTS
The IEA chief underlined the need for maintaining investments in the oil sector despite the current low prices, especially by OPEC producers.
"If they don't invest now, or postpone or slow down their projects, we will have a serious problem again, when demand comes back," he said. "We have learnt this lesson already. T
his kind of volatility is not good for producing or consuming countries. To avoid that, they [OPEC members] should continue their investments as planned," Tanaka added. Though there was some spare capacity within the cartel now, Tanaka said he expected it to fall to worryingly low levels between 2010 and 2013.
"The financial crisis has slowed demand but supply is falling too. When the economy recovers, the market could be tighter in the mid-term," he said.
The need for a minimum oil price level to sustain investment and production was a "very valid argument for marginal barrels" such as deepwater production and non-conventional oil, Tanaka said.
However, "for the OPEC Middle East producers, I think their production cost is much lower than the current price."
Saudi Aramco earlier this month said it would delay a 400,000 b/d oil refinery project it had planned with ConocoPhillips. The company also extended the bidding deadline for another 400,000 b/d refinery planned with Total from November to February.
However, Aramco stressed that there was no change to its upstream commitments and plans were on track to achieve a targeted expansion in production capacity to 12 million b/d. Qatari oil minister Abdullah al-Attiyah last week said his country was proceeding with planned projects despite the sharp decline in oil prices because it had been mitigated by the rise in the value of the US dollar and lower inflation.
ANOTHER CUT IN 2009 DEMAND GROWTH ESTIMATE LIKELY
Asked about the likelihood of the IEA further cutting its projected 350,000 b/d growth in 2009 world oil demand, Tanaka said if the global economic downturn continued or became more severe, "Certainly there is a possibility of [another] downward revision. But how far, how much, I don't know."
The IEA's expectations of 2008 global oil demand growth, though successively pared down over the past months and slashed by 670,000 b/d in its November 13 report, compare with forecasts by some think tanks for a decline and the US Energy Information Administration's view that demand will level off next year. On the subject of OECD stocks, Tanaka said he did not have the latest estimate for physical barrels but the number of days of stock cover was increasing in November because of a decline in consumption.
Oil inventories in the OECD countries stood at 2.63 billion barrels at the end of September, representing a "high" stock cover equivalent to 55 days, the agency said in its November 13 report.
ENHANCED COOPERATION WITH INDIA, CHINA
Meanwhile, given that almost all of the future new oil demand was expected to come from non-OECD countries, Tanaka said the integration of countries such as China and India with the IEA was of strategic importance.
"We have had a good dialogue with them about cooperation in energy efficiency, emergency measures, clean coal technology. This cooperation can pave the way for future integration," he said.
The IEA officially agreed to enhance areas of cooperation with China and India at its March board meetings. Tanaka said he would also like to see greater cooperation with Southeast Asian countries such as Indonesia, Malaysia, Thailand and Vietnam.
The IEA's interest in Indonesia was growing, Tanaka said, noting that the agency had just released a report on an energy policy review of the country. With its oil production falling and net exporter status diminishing, Indonesia is exiting OPEC starting January 2009.
Tanaka was in Singapore for the Southeast Asia launch of the World Energy Outlook 2008.
Story by Vandana Hari and Mriganka Jaipuriyar from Platts
-mriganka@platts.com; mriganka@platts.com
Platts 26 11 08
Copyright© 2008 respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.
Your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.com
Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels