Business Times 7 Jan 08;
Taking into account inflation, the current price is below 1980 record, cartel says
(PARIS) The price of US$100 for a barrel of crude oil is 'not necessarily very high' given the high demand of oil and higher production costs, the president of the Organization of the Petroleum Exporting Countries (Opec) said yesterday.
On Wednesday, the price of a barrel of crude reached US$100.09 in New York, before retreating at the close to US$99.18.
Algeria's Energy Minister Chakib Khelil - who took over the rotating presidency of Opec on Jan 1 - told AFP that the current surge must be seen 'in relation to the real price', that is taking into account inflation.
The current oil price was therefore below its 1980 record of 'between US$102 and US$110 depending on estimates', he said.
Mr Khelil said that high oil demand was not only being pushed by 'China and India but also by the Middle East whose consumption has risen immensely'.
'When you take that into account, US$100 is not necessarily very high,' he said.
Mr Khelil said on Saturday: 'The surge in price will probably go on until the end of the first quarter of 2008, before stabilising during the second quarter.'
Speaking on the sidelines of a conference on the security of hydrocarbon pipelines in the Algerian capital, Mr Khelil said to members of the press that a second-quarter stabilisation was 'probable'.
Mr Khelil said on Saturday that the steady rise in prices was due to tension in Pakistan, escalating violence in Nigeria and a fall in oil inventories in the United States.
In Riyadh, Saudi Oil Minister Ali al-Naimi said the record prices have been set by the market.
'The market fixes the price of oil,' Mr Naimi told reporters at an energy conference in Riyadh when he was asked to comment on the surge of oil to a record above US$100 last week.
Mr Naimi declined further comment on the price or what Opec would decide at its next meeting on Feb 1 in Vienna.
Saudi Arabia is the world's largest oil exporter and the most influential voice in Opec.
High energy costs have caused concern among some members of Opec regarding the potential impact on the global economy.
But ministers say there is little they can do to tame the price, which is driven by political tension and speculators and not supply and demand fundamentals.
An official of Saudi state oil giant Saudi Aramco is on track to hit its oil production capacity target of 12 million barrels per day (bpd) in 2009.
The start of Aramco's 500,000 bpd Khursaniyah oilfield was delayed a few months to the first quarter this year from December last year.
Other expansion projects remain on schedule, Aramco's senior vice-president of exploration and production Amin al-Nasser said.
'We are going up to 12 million bpd (oil production capacity) in 2009,' Mr Nasser said at a presentation to an energy conference in Riyadh.
Aramco's total output capacity does not include the Saudi share of capacity in the neutral zone which is between the kingdom and Kuwait.
Saudi Arabia is aiming for total output capacity, including the neutral zone, of 12.5 million barrels per day in 2009.
Saudi Arabia is spending billions on projects to meet growing world demand and maintain spare capacity of 1.5-2 million bpd of oil to deal with any unexpected outages in global supply.
A 250,000 bpd expansion at the Shaybah oilfield and the development of the 100,000 bpd Nuayyim field will add another 350,000 bpd of capacity by the end of 2008, Mr Nasser said.
The planned 1.2 million-bpd Khurais oilfield is expected to start production by mid-2009.
The 900,000-bpd Moneefa oilfield will start production in September 2011, three months later than Aramco's initial schedule.
Aramco also aims to boost gas output capacity to 12 billion cubic feet per day (cfd) in 2011 from 9.5 billion cfd, he said. -- AFP
Oil prices to keep rising, says Opec president
Straits Times 7 Jan 08;
Speculators driving surge in crude oil market, Qatari oil minister points out
ALGIERS - OPEC president Chakib Khelil said on Saturday he expected oil prices to keep rising during the first quarter before stabilising in the following quarter.
'The rise is likely to continue until the end of the first quarter of 2008 and will stabilise in the second quarter,' Mr Khelil, who is also the Algerian energy and mines minister, told Algerian official news agency APS.
He linked the steady rise of oil prices to 'political tension in Pakistan, escalating violence in Nigeria and a decline of oil inventories in the United States', APS added.
Oil in New York hit US$100 a barrel last Wednesday, the first trading day of the new year.
In further comments relayed by Algerian state radio, Mr Khelil said the Organisation of Petroleum Exporting Countries' (Opec's) next meeting would closely study forecasts for world economic growth, particularly those of the US, which had been seriously affected by the sub-prime mortgage crisis.
The world market had sufficient oil supplies for now, and no decision could be made to increase production before the next conference, he was cited as saying.
Opec is scheduled to meet next on Feb 1 in Vienna.
Separately, a Kuwaiti newspaper quoted the Qatari oil minister as saying Opec was not behind the recent rise in oil prices, as markets were well-supplied and the price was being driven purely by speculators.
'Investment funds and speculators are behind the recent hike,' Mr Abdullah al-Attiyah told al-Jarida newspaper in comments published last Friday.
'The market is not suffering from any lack in supplies, and there is no disturbance in producers' regions.'
Opec, a source of more than a third of the world's oil, decided to keep oil output steady at a Dec 5 meeting, rebuffing calls from consumer countries for more supply to rein in prices, then at levels of around US$90.
REUTERS
