Business | Oil & Gas
Gulf oil producers seek stable market
In a slowing global economy, Gulf oil producers are seeking stable oil prices that will guarantee sufficient revenues for reinvestment in the energy sector, a senior UAE oil ministry official told an energy conference yesterday.
- By Stanley Carvalho
- Published: 00:00 February 20, 2002
 Dr Ismail |
And although demand for crude oil is forecast to grow in the coming decades, the call from Opec would be lesser, the official added.
Dr. Ibrahim Ismail, economic advisor, UAE Ministry for Petroleum & Mineral Resources, told an International Symposium on Energy Development that GCC oil producers need a fair oil price that is stable to develop energy-related projects. "Continuation of unstable prices may discourage investment," he said.
"Gulf oil producers like to be assured that demand for energy is there before embarking on further investments and development and also they would like to utilise their excess capacity."
The continued discrimination in energy policies of major consuming countries against oil and the high taxation on petroleum products will aggravate the situation and this is another challenge gulf oil producers have to face, he added.
Ismail stressed the Gulf energy producers have to contend with political and technical implications. But as past experience shows, Gulf states can weather political storms vis-a-vis crude oil because most of them have excess production capacity and hence supplies are secured.
However, the technical factors pose a big challenge, he said, citing heavy taxation of petroleum products by major consuming nations which has led to decreased demand for oil.
Evidently, the cost of production is cheapest in the Gulf, noted Ismail. The production and development of a barrel of crude in the Gulf is less than $5 whereas it is between $6 and $30 in the U.S. and between $8 to $15 in the North Sea.
Although the Gulf is home to 662 billion barrels of crude oil or 65 per cent of total world proven reserves, it produces less than 20 million bpd of crude oil or some 30 per cent of total world production.
Similarly, proven natural gas reserves in the Gulf are 52 trillion cubic metres or 33 per cent of the world's natural gas reserves. But marketed production of natural gas from the Gulf is only 200 billion cubic metres per year or 8 per cent of the world's total.
"Clearly, there is an imbalance here," he stated.
World demand for oil could grow by 0.5 million bpd to 76.2 million bpd by 2002 end but this depends on the performance of the world economy, said Ismail, adding that the call on Opec is likely to decline to 25.6 million bpd end-2002 from 26.1 million bpd in 2001.
"There is about 7.5 million bpd of unused production capacity in Opec and non-Opec, but mainly in Opec."
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