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French Version

Saudi Arabia ready to increase crude output opec to decide on new production ceilings (Daily Star)

A minister also played down the threat of recent violence to the country's industry

Saudi Oil Minister Ali al-Naimi said Wednesday that his country is ready to increase oil output to help bring down the prices of crude, but he expressed doubt that this step will help stabilize prices.

"Contrary to the claims of some experts, the prices of oil are not determined by OPEC but by the supply and demand. In addition, speculators help raise the prices with their analysis," Naimi told economists and reporters at UN House in Beirut.

Naimi said that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries (OPEC) believe that the price of oil should range from $25 to $28 per barrel.

The minister, who is attending the OPEC meeting in Beirut, said other oil producers in the organization are willing to raise the output.

The price of a barrel of crude oil jumped to more than $42 this week, as experts differed on the reasons behind the surge.

Saudi Arabia is currently pumping more than 9 million of barrels of oil per day (bpd). This figure may reach even higher levels if OPEC decides to raise its output limit.

Saudi Arabia, which has the largest oil reserves in the world, has been pumping an extra 1.5 million bpd of crude in the past two months to meet the world demand.

China is one of the countries that has increased oil imports from some OPEC members, due to its booming economy, which is expected to see GDP grow by 8 percent by year's end.

OPEC has yet to decide on the ceiling for the new oil output amid expectations that the organization may agree to lift output from 23.5 million to 26 million barrels per day. Some experts claim that recent terrorist attacks in Saudi Arabia have caused the prices of oil to soar.

But Naimi rejected these analyses, stressing that all of the kingdom's oil facilities are well-protected by Saudi security forces. "Saudi Arabia has a spare production capacity of 2 million barrels per day," he said.

However, Naimi said that Saudi Arabia may not use its capacity to its fullest extent, as "we have to be cautious and remember what happened in 1997 and 1998," when a global economic crisis saw oil prices fall below $10 per barrel.

"The kingdom insists that the fair price is around $25 per barrel," said Naimi. He added that Saudi Arabia and the other 10 members of OPEC "are working to stabilize prices within the price band of $22 to $28 per barrel for the OPEC basket of crude."

Oil companies operating in Saudi Arabia have bolstered security following weekend violence in which 22 people were killed in and around a residential compound for foreigners in the eastern oil center of Khobar.

Naimi also reacted to reports that Saudi Arabia may face some problems as a result of the departure of some foreign experts: "This news is much exaggerated. Only a handful of Western experts left the country. Most of the foreign staff remained in the kingdom."

Naimi added that Saudi Arabia has a considerable number of well-trained nationals who are running the kingdom's oil installations."More than 86 percent of the people working in these installations are Saudis," Naimi said. "We have no problem in running these facilities even if foreign workers left."

Saudi Arabia has 261 billion barrels of oil reserves, or 25 percent of the world deposits. Total oil reserves throughout the Arab world stand at 700 billion barrels, or 60 percent of global reserves.

Naimi said OPEC oil exports to other Arab states are very small, as most of these countries produce their own crude. Egypt and Syria produce limited amounts of oil but these quantities hardly meet local needs.

Beirut 14-06-2004
Osama Habib
The Daily Star

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