High oil prices not in OPEC's long-term interest: Khelil

Algiers (Platts)--31Aug2005

Current high oil prices are not in the medium- or long-term interest of
OPEC as they will encourage consumers to lessen their dependence on OPEC
crude, Algerian oil minister Chakib Khelil said Tuesday.
     Speaking after WTI crude futures in New York touched a record $70.85/bbl
Tuesday, Khelil said a prolonged period of high prices would prompt a search
for oil away from OPEC countries.
     "In the medium and long term, prices remaining at high levels is not in
OPEC's interest as it will lead the large oil consuming countries to engage in
greater efforts to explore for oil in non-OPEC regions, notably in deep
waters, as happened in the North Sea after the 'oil shock' of 1973 when high
oil prices translated into the development of large oil fields in the North
Sea," Khelil said in an interview with Algeria's official APS news agency.
     "For example, during 2004, of the 12 large oil fields discovered in the
world, nine were found in the very deep offshore," he said. "The combination
of this factor and the switching to renewable energy could bring about see the
an increasingly low dependence of consumer countries on OPEC oil."
     Earlier Tuesday Khelil said Algeria would back an increase in the OPEC
output ceiling as a "goodwill gesture" to help cool oil prices though he
insisted the recent price spike in prices following the passage of Hurricane
Katrina through the Gulf of Mexico was not because of a shortage in supply.
     "Algeria backs an eventual decision by the Organization of the Petroleum
Exporting Countries to raise production quotas in order to help calm the oil
market," Khelil told APS.
     OPEC President Sheikh Ahmed Fahed al-Sabah said Monday he would propose
that the producer group raise its ceiling by 500,000 b/d and its physical
supply to markets by the same amount when ministers meet in Vienna Sep 19.

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