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Opec to study pricing method
Gulf Daily News (“The Voice of Bahrain”)
CARACAS: The Opec is likely to discuss creating a basket of currencies for oil pricing at its next summit due to the steady decline in the dollar, Venezuela’s Energy Minister Rafael Ramirez has said.
“The need to establish a basket of currencies … will probably be a point of discussion in the next Opec summit,” Ramirez said during an evening event in the presidential palace.
“The dollar as a benchmark currency has been weakening quite a lot and it creates distortions in oil markets.”
The cartel is slated to hold a summit of the heads of state of Opec nations next month and a meeting of ministerial delegates in December.
Ramirez added that world oil markets are well-supplied with petroleum inventories above average, reiterating suggestions earlier this week that Opec is not likely to hike output to calm record-high prices.
“We have enough oil in the market, the inventory levels are above the average of the last five years,” he said.
Oil prices have soared in part because of a weakening dollar that tumbled in the wake of an interest rate cut by the US Federal Reserve. Officials from the US and China – the world’s two largest oil consumers – have expressed concern that current crude prices are too high.
(28 October 2007)
Why Kuwait wants to shift to heavy oil
Rania El Gamal, Kuwait Times
Last week, Kuwait announced its plans to shift into heavy oil production during an international oil conference to meet its 2020 target of producing 4 million barrels per day (bpd).
Kuwait has traditionally produced and exported mainly medium to light crude since the 1950s. Now KOC is pushing for more involvement of international oil companies in developing its heavy oil assets.
…Reasons behind Kuwait’s planned shift to heavy crude are many: The state hopes producing heavy crude will help boost its oil production to 4 million bpd within the coming 12 years. Kuwait also hopes to capitalize on economic growth in China and the increasing demand for oil in Asia as well as soaring oil prices and the decline in the country’s light oil reserves.
Kuwait aims to increase its oil production to 4 million bpd by 2020 and 25 percent of those 4 million barrels will be from heavy oil, according to Al-Sumaidi. Whether or not Kuwait will be able to achieve its 2020 target is not evident by the current political standoff according to analysts.
We are very pessimistic about (Kuwait’s) chances of hitting the 4 million bpd target – largely because political issues that have long dogged projects and are going to continue to be major factors,” David Kirsch, manager of market intelligence at Washington-based consultancy PFC Energy told Reuters earlier this month. He added that Kuwait’s capacity is expected to be just 3 million bpd by 2017. Kuwait currently producing around 2.6 million bpd, down from almost 3 million bpd in 1972, according to the Arab
Oil & Gas Industry.
As estimates of heavy oil reserves worldwide are up to six times greater than those of light oils, according to industry reports, an increased consumption depletes light crude reserves, making heavy crude increasingly sought-after.
(28 October 2007)
Gulf countries eye alternative energy sources
Gulf Daily News (“The Voice of Bahrain”)
MANAMA: The hydrocarbon-rich Gulf countries are exploring the use of alternative and renewable energy resources, including coal, nuclear, solar, wind and hydrogen, says a leading industry expert.
“The vast majority of power generation projects in the Arabian Gulf are for power stations using conventional gas for their energy source,” said ESR Technology’s group CEO David Weaver. ESR is one of the world’s leading engineering, safety and risk management companies.
“But the region is struggling to find enough suitable gas to meet future power demands and the first signs are beginning to emerge of major investment in the region into alternatives,” he added.
“It may seem surprising that, with all the available hydrocarbon reserves, alternatives are figuring increasingly in Gulf region power planning. However this is displaying the classic wisdom: ‘In victory plan for defeat.’ In other words, when times are good, build resources against future uncertainty.” …
(28 October 2007)
China and its Role in the Oil Price Rise
Walid Khadduri, Al-Hayat
There are a number of reasons behind the rapid increase in oil prices. Some people say that the reason is OPEC members’ failure to take the initiative to raise production to achieve the required balance between supply and demand in international markets. In fact, there is no actual shortfall in markets; the current anxiety is due to the fear of a surprise interruption in future supplies, for political, climatic or industrial reasons. The commercial oil reserve, especially in western industrial industries, stands at the average levels it has reached over the last five years. The criticisms of OPEC by the International Energy Agency can be summarized as follows: OPEC states don’t want to increase production enough to enable western industrial states to compensate for what has been drawn down from the commercial reserve in past months.
For its part, OPEC criticizes the role of speculators in oil markets, since their daily investments are estimated at tens of billions of dollars, while the scope of oil transactions that they deal with on a daily basis is dozens of times bigger than OPEC’s level of production, and thus, their big impact and influence on oil markets are not matched by any significant responsibility for developing the industry itself.
China is being cited as one of the chief reasons behind the price rise these days, although Chinese officials deny this “accusation.”
Dr Walid Khadduri is an expert in energy affairs
(28 October 2007)
