Qatari minister blames weak dollar for high oil prices

May 18, 2005 02:00 AM

Qatar's energy minister blamed persistent high oil prices on a weak dollar and rising costs for construction and materials needed to extract petroleum.
Economists estimate that the dollar has lost nearly 40 % of its buying power in the past four years. As such, overseas contractors are finding the euro more attractive making oil production more costly, said Abdullah Bin Hamad al-Attiyah, deputy prime minister of energy and industry for Qatar.
"We are a dollar-based market and we are now seeing contractors wanting to avoid the dollar," Mr al-Attiyah said during a meeting in Washington.

He said prices for construction of oil-platform-building materials, steel and its derivatives including nickel and titanium have risen 100 %.
"The theory is that major oil producers -- because all oil activity is done in dollars -- spend dollars and if they are doing more business in Europe, buying more goods from them, it is costing them a little more," said Ron Planting, an economist with the AmericanPetroleum Institute. But Mr Planting said the state of the dollar alone does not explain the significant rise in oil prices over the past five years.

Sen. Pete V. Domenici, New Mexico Republican and chairman of the Senate Energy and Natural Resources Committee, said he, too, was sceptical of Mr al-Attiyah's reasoning, but added that it might have been moot if Congress had passed a comprehensive energy policy in 2001. Mr al-Attiyah said the Middle East is desperate for the United States to come up with a defined energy policy because it would make life easier when planning new projects for LNG refineries in the United States.
"Of course they want us to have an energy policy, they [Qatar] are going to be the Saudi Arabia of LNG in 10 years," said Mr Domenici, who will begin marking up the energy policy act with the hope of getting it passed by early June.

According to the US Department of Energy, Qatar has the third-largest natural gas reserves in the world. It is also becoming a major exporter of LNG. Qatar is a member of OPEC and exported more than 1 mm bpd of liquids in 2004, according to the department.
Also in Washington was Saudi Arabian Oil Minister Ali al-Naimi, who said that the kingdom has plenty of oil in the ground to meet global demand for now. But he acknowledged that the perception of a tight market has contributed to higher prices.

"I stand here to tell you that Saudi Arabian reserves are plentiful, and we stand ready to raise output as the market dictates," Mr al-Naimi said in a speech. "Very high or unstable prices are not in the interest of producers," he said, adding that oil producers also suffer when the world economy slows.
Crude futures fell trading near three-month lows. Light, sweet crude for June delivery slipped 16 cents to $ 48.45 a barrel in morning trading on the New York Mercantile Exchange. It settled at $ 48.61 a barrel after hitting an intraday low of $ 47.60.

Source: The Washington Times
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