Libya oil chief says geopolitics adding $20 to oil prices

Libya oil chief says geopolitics adding $20 to oil prices

Paris (Platts)--15Aug2006

Libya's top oil official said Tuesday that geopolitical tensions in the
Middle East and other key oil-producing nations had added as much as
$20/barrel to the price of oil, and that OPEC was powerless to bring down high
oil prices which earlier this month climbed to a new $78.65/barrel record.
"OPEC has done all that it could. We increased the production, we don't
have much more to increase. What is happening in the market is nothing to do
with supply and demand," the head of Libya's National Oil Corporation Shokri
Ghanem told Platts by telephone from Tripoli.
Oil prices have fallen back from the highs of more than $78/barrel first
reached last month, slipping again Tuesday as a UN-brokered ceasefire in
Lebanon entered its second day.
North Sea Brent was trading around $74/barrel at 1238 GMT, $4.65/barrel
below the all-time high set August 8 after BP's announcement two days earlier
that it was shutting its Prudhoe Bay oil field in Alaska because of corrosion
in the pipeline network. US light sweet crude was trading at $73.30/barrel on
the Access electronic system.
"Certainity is what is lacking in the market. It is not about the supply
and demand. We are doing all we can but I think geopolitcal tensions have
added $20/barrel to the prices," Ghanem said.
Ghanem said said Libya, which is currently averaging between 1.65 million
b/d and 1.7 million b/d, would increase production capacity to 2 million b/d
next year and to 3 million by 2010.
"No one has done as much as Libya. We are opening up our doors for more
exploration, more development. We have declared that it is our intention to
increase the production capacity next year to 2 million b/d and to 3 million
b/d in 2010, which we were producing in the 1970s," he said.
Ghanem also said OPEC, the source of 40% of the world's oil, won't hold
an emergency meeting ahead of its September 11 conference in Vienna. "We don't
think that there is any need for an emergency meeting. We are meeting next
month and I don't think OPEC can do very much for the market now."
OPEC last Thursday said it was ready to act to correct "any imbalance" in
world oil markets resulting from the partial closure of BP's Prudhoe Bay
field, and noted that its June conference in the Venezuelan capital Caracas
had authorized the OPEC president to convene an emergency meeting if this were
deemed necessary. It added, however, that it was confident that global oil
markets were adequately supplied.
The oil cartel's Vienna secretariat described the loss of Prudhoe Bay
output as "the latest in a series of events that has pushed oil prices to
successive record levels."
BP, meanwhile, has managed to maintain some output from Prudhoe Bay,
which normally produces 400,000 b/d. The company said August 12 that it had
shut the 200,000 b/d eastern operating area but hoped to boost western area
oil and NGL output, currently 150,000 b/d, to 200,000 b/d after some
maintenance work. It did not say when it hoped to complete the work.
Some 750,000 b/d of Nigerian crude production -- around a quarter of the
country's total production capacity -- remains shut in after a series of
attacks by militants on oil installations in the Niger Delta that intensified
earlier this year. Rising deepwater production has helped offset some of the
losses. Nigerian oil minister Edmund Daukoru, who is also the current
president of OPEC, said Monday that production was "coming back in tranches"
and said efforts were being made to engage community leaders in talks.
--Jacinta Moran, jacinta_moran@platts.com

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