Opec to boost spare capacity

Abu Dhabi: The Organisation of Petroleum Exporting Countries (Opec) has plans to increase its spare capacity to nine million barrels per day (bpd) in the long-term in a bid to ease supply pressures in a volatile global oil market and to ensure price stability, a top Opec official said.

Opec, which contributes more than 40 per cent of global oil output, currently has spare capacity of 3.5 million bpd, which will shortly go up to four million bpd as new production is widely expected to come on stream in Saudi Arabia, Opec's largest oil exporter, by next month.

"We have enough oil, enough reserves. Opec's spare capacity will increase to five million barrels per day by around 2012 and will gradually rise to nine million barrels per day," said Abdullah Al Badri, Opec's Secretary General.

Al Badri attended Opec's extraordinary meeting in Abu Dhabi on December 5. It decided to leave its production unchanged for the time being, based on the assessment that the oil market continues to be well supplied, with comfortable levels of forward cover in terms of days for commercial crude and product stocks.

Saudi Arabia currently has the biggest spare capacity at 2.3 million bpd, while Iran has a spare capacity of 150,000 bpd and Libya up to 250,000 bpd. Some other Opec producers also have spare capacities.

Investors fear that as global demand for energy grows, fuelled by the rapid development of China and India, oil supplies will not be able to keep up.

Currently, oil producers supply about 85 million bpd, while the US Department of Energy says global oil consumption is between 85 million and 86 million bpd.

The combined production capacity of Opec is set to rise 4.68 per cent by the end of 2008 to 35.8 million bpd, the Paris-based International Energy Agency (IEA), which advises 26 industrialised nations on energy policy, has estimated.

Opec's crude output target is currently set at 27.253 million bpd.

Twelve Opec members pumped 31.14 million barrels of crude a day in November, while the 10 members subject to quotas produced 27.09 million barrels a day, according to the latest estimates.

Outlook: Shipments to go up

Opec members are expected to raise oil shipments by 380,000 barrels a day in the four weeks to December 22 compared with the previous four weeks, tanker tracker Oil Movements said.

Opec shipments are expected to rise to a total of 24.54 million barrels a day in the four weeks to December 22, compared with 24.16 million barrels a day in the previous four weeks. Sailings from Opec's Middle Eastern members are expected to rise by 300,000 barrels a day in the four-week period to 17.63 million bpd, Oil Movements said.

- Bloomberg