June 12, 2007 -- World
oil markets are well supplied with crude and OPEC will only
raise output if it sees changes in fundamentals, including a
"constant" draw in consumer oil inventories and oil prices at
high levels for a sustained period, OPEC Secretary General
Abdalla el- Badri said June 5.
"There is plenty of oil in the market. We have to be convinced
[of a change in the fundamentals] and see some drawdown in
stocks," Abdalla el- Badri, OPEC Secretary General
Badri also said OPEC hoped to bring Angola, which joined the
oil producer group in January, into the quota system by the end
of this year or early in 2008.
"There is plenty of oil in the market. We have to be
convinced [of a change in the fundamentals] and see some
drawdown in stocks," he told Platts in an interview in London.
For OPEC to boost crude production, "we have to see a constant
drawdown [in stocks] and a constant high price for a reasonable
amount of time."
Asked to comment on the International Energy Agency's call
for OPEC to raise output this summer, Badri said he had met with
IEA Executive Director Claude Mandil last month in Bali. "I told
him OPEC will not act because of day-to-day changes," he said.
Badri said oil prices, currently above $70/barrel for North
Sea Brent, were high because of a number of factors, including
"the geopolitics in the Middle East...the Nigerian problems and
also some refinery problems in the United States."
Badri pointed out that average prices for the year to date
were, at $61.70/b for Brent, $60.30/b for US benchmark WTI and
around $58/b for the OPEC basket, well below $70/b. "We are a
long way from $70/b," he said.
Asked if $70/b might be a trigger for boosting output, Badri
said: "I don't want to say $70, but if prices keep climbing for
a sustained period of time, then we will do something about it."
OPEC under pressure
OPEC has been under pressure from consumer countries to boost
output beyond its official 25.8 million b/d target, which covers
10 of its 12 member countries.
At their last meeting in mid-March, ministers decided to keep
in place the 1.7 million b/d in crude output cuts agreed late
last year. The next meeting is scheduled for September 11.
Turning to OPEC's first new member in more than 30 years,
Badri said in addition to bringing Angola into its crude
production quota system by early 2008, OPEC also expects to
introduce an Angolan crude grade into its 11-crude reference
basket before the end of this year.
Badri said he planned to travel in late August to Angola,
where he would discuss the two issues with Angolan authorities.
"I would like to go to them and exchange ideas about their
production portfolio and talk to them about our basket and what
type of crude they want represented," he said.
Angola still outside quota
system
Angola joined OPEC January 1 but remains outside the quota
system OPEC uses to manage production. Badri said assigning
Angola a quota was a "ministerial decision" but said he would
discuss the issue and future production expansion plans during
his visit.
OPEC's crude basket currently consists of one grade from each
of its other 11 members: Algeria's Saharan Blend, Indonesia's
Minas, Iranian Heavy, Iraq's Basra Light, Kuwait's Export Blend,
Libya's Es Sider, Nigeria's Bonny Light, Qatar Marine, Saudi
Arabia's Arab Light, Murban of the UAE and Venezuela's BCF 17.
Badri said OPEC already had suggested to Angola that Cabinda
crude might be included in the basket. Asked when he expected an
Angolan crude to be represented in the basket, he said: "I hope
by the end of the year."
Some analysts have expressed concern that Angola's membership
of OPEC could jeopardize investment in the country if it is
required to rein in production, although countries like Nigeria
and Venezuela have openly flouted quotas in the past at times of
great expansion.
Manuel Vicente, chairman of state-owned Sonangol, said in
March that Angola expected to invest $50 billion in its oil
industry over the next six years.
Current production is around 1.6 million b/d and Angolan
officials have said this is expected to reach 2 million b/d
early next year.
International oil companies working in Angola's upstream
include Chevron and Exxon- Mobil of the US, the UK's BP, Italy's
Eni, France's Total and Norway's Statoil and Norsk Hydro. About
4% of Angola's crude is exported to the US.
Sudan and former member Ecuador have raised the possibility
of joining OPEC, but Badri said there had been no "official
contact" with either. Like Angola, Sudan has attended some OPEC
meetings in recent years as an observer.
Sudan hopes to boost average production from around 340,000
b/d in 2004 to about 600,000-650,000 b/d by the end of this
year.
It is targeting output of 1.1 million b/d by 2010. With
domestic consumption estimated at under 100,000 b/d, the bulk of
Sudan's oil is exported, most to Asia.
Ecuador, according to the US Energy Information
Administration, produced 540,000 b/d of oil last year.
Ecuador sends more than half of its oil exports to the US,
the remainder being split between Latin America and Asia.
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