UAE plans to lift oil production to 2.7 mm bpd

Sep 26, 2005 02:00 AM

by Haseeb Haider

The UAE said an increase in crude oil output of 200,000 bpd will be achieved by the first quarter of year 2006, to touch 2.7 mm bpd output, up 8 % from the current level of 2.5 mm bpd.
"The increase in oil output will be achieved during the next two quarters. By the fourth quarter of year 2005, a capacity of 100,000 bpd will be added, while an equal quantity will come up by the first quarter of 2006, to make a total of 2.7 mm bpd. This extra crude would come from onshore fields," said Minister for Energy Mohammed bin Dha'en Al Hamili on the sidelines of 11th annual energy conference on “Gulf Oil & Gas: Ensuring Economic Security”, organised by the Emirates Centre for Strategic Studies and Research (ECSSR) in capital.

To a question regarding the country's plans to expand the refining capacities to meet the escalating demand for refined oil, Minister Hamili said some studies have been commissioned to examine the potential. He told that OPEC holds extra reserve capacity of 2mm bpd. However, he said the status of this amount in the market depends on world demand.
The three-day annual oil and gas international conference kicked-off with a key note address of Sheikh Ahmed Fahad Al-Ahmad Al-Sabah, president of OPEC, and Minister of Energy, Kuwait. On the first day, Sheikh Mansour bin Zayed Al Nahyan, Minister for Presidential Affairs, was the chief guest.

On the first day besides an inaugural session two penal sessions were held in which experts discussed the issues of oil prices: Impact on long-term economic growth in the Gulf and geopolitical factors in oil price trend.
The OPEC chairman, in his speech, which was read out by Sheikh Talal Khaled Al-Ahmed Al-Sabah, MD for Petroleum Services, Kuwait Petroleum Corporation said: "We are meeting at a time when issue of achieving economic security for the oil producing nations and the world at large is a matter of great concern and world oil markets have rarely witnessed such turbulent times as in the last two or more years".

He said that the prices have not only struck record levels repeatedly, at least in nominal terms, but there is a lack of clear consensus on just what levels they will reach in the future.
"Unlike previous oil shocks, current high oil prices are the result of healthy global economic growth, which has led to high consumption and demand which has taken every body by surprise. This has meant a significant reduction in global spare production capacity, furthering feeds oil price volatility", the OPEC chief commented. He said the global economy has demonstrated a better degree of resilience than before in withstanding higher prices. OPEC, he said, understands fully these effects and was aware that they harm not only the consuming nations, but the producing ones as well.

Sheikh Ahmed Fahad Al Sabah was of the view that there are some who are envious of the producing nations as being the sole beneficiaries of high oil prices and therefore considering them as responsible for orchestrating such prices.
"It is not surprising that we so often come across reports that regard OPEC as the culprit every time, when there is a rise in oil prices, and we received calls from OPEC countries to urgently increase their production", he said.
OPEC is trying to bring the current prices down, by whatever means available by increasing its production ceiling several times during the course of the current price rise and will increase the ceiling further whenever it sees fit, in order to create stability in the market.

OPEC members are responding positively to the current situation by producing at or near their full capacity in order to meet the demand.
"It is not a secret that OPEC is considering other means of bringing prices to acceptable levels, through assuring the market of its willingness to meet any demand. Notwithstanding, the current prices, there has never been an actual shortage in oil supplies", he said.

Admittedly, this times there is a fear that demand will genuinely outstrip oil supply,which will result in shortages, but OPEC can assure the market that it will do whatever it can to restore stability to oil prices, not only in the short term but also in the long term, through the expansion of production capacity, which will require substantial investment and entail greater cooperations between all the players in the international oil industry.
Hurricane Katrina and response of the OPEC nations, which included a commitment that they would meet any supply shortfall, has demonstrated the willingness of OPEC to work with consumers, which is vital in achieving a stable world economy.

In the first session on "Oil prices: Impact on long-term economic growth in the Gulf", Dr Herman T. Franssen, president of International Energy Associates, said global economic growth has slowed down, but oil market conditions have remained tight despite a more than 50 % increase in the prices of crude and a slowdown in oil demand growth.
In the short term, Dr Herman said that the impact of high oil priceshas been beneficial for Gulf producers, enabling some to repay domestic and foreign debt and embark on necessary infrastructure expansion.

Source: Khaleej Times Online
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