OPEC prepared to take action if oil prices dip below $60: Libya

OPEC prepared to take action if oil prices dip below $60: Libya

Paris (Platts)--26Sep2006

Libya's top oil official Shokri Ghanem said Tuesday that he saw no need
for OPEC to cut crude output with oil prices at $60/barrel prices but said the
cartel could take action if prices fell further in coming months.

Current prices are not a 'concern' for OPEC, Ghanem said in a telephone
interview, adding that he expected prices to remain at around the current
level for "some time."

"There is between $10/barrel and $12/barrel on the price because of the
speculation and geopolitics and not because of the fundamentals. If it goes
below [$60/barrel], then we can look at it," Ghanem said.

But he said the market was "relaxed and comfortable" with ample oil in
place. "OPEC is doing all it can. Our policy is to balance the supply and
demand."

Ghanem, a former prime minister who now heads Libya's National Oil Co,
also said OPEC was not considering an emergency session ahead of its next
scheduled meeting on December 14 while prices hover around $60/barrel.

"If it stays around $60/barrel, I don't think there will be any need for
an emergency meeting. Of course prices are always going to be volatile because
they are determined by the futures market," he said.

Crude benchmarks in New York and London have fallen by close to 25% in
recent weeks. Front-month ICE Brent was trading at $60.27/barrel and NYMEX at
$60.99/barrel in afternoon trade Tuesday, having been as high as $78.65/barrel
and $78.40/barrel in mid-July and early August, respectively.

CURRENT PRICES NOT A CONCERN

Asked if he was concerned that oil prices could fall even further, Ghanem
said: "No I don't see it going below $60/barrel. Of course, it depends on the
fundamentals. We are following the fundamentals more than the psychological
factors. If there is more oil in the market, of course we will then balance
the market but if there is more demand, we have to supply it. At this time,
these current prices are not a major concern to us."

"We don't think it will go much below, I think it will hover around the
$60/barrel for some time," he added.

The Centre for Global Energy Studies said Monday that world oil prices
are likely to continue their six-week fall unless OPEC acts to reduce supply
as demand for its crude falls in the coming months.

If OPEC wants to keep Dated Brent crude prices at around $60/barrel over
the winter, it needs to reduce output to 29.4 million b/d in the fourth
quarter and to 29 million b/d in the first three months of next year, the
London-based think-tank said in its Monthly Oil Report

A Platts survey of OPEC and industry officials estimated OPEC crude
production at 29.91 million b/d in August.

--Jacinta Moran, jacinta_moran@platts.com

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