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OPEC May Cut Oil Outflow to Stablize Prices
The Organization of Petroleum Exporting Countries (OPEC) will discuss the possibility of reducing oil production by one million barrels per day (bpd) at its next conference this month.
The decision would be made at the OPEC meeting on November 14 in Vienna, Austria, OPEC secretary-general Ali Rodriguez Araque revealed at a press conference after presenting a paper at the ASEAN Council on Petroleum (ASCOPE) conference and exhibition Monday in Kuala Lumpur.
The main issue at the OPEC conference would be to ensure members' full compliance with their commitments, and the second would be the reduction in oil production, he added.
Under the present OPEC agreement, member nations are producing about 23 million bpd, he said
There was an oversupply and very high stock of crude oils and oil products because of the slowdown in the global economy, made worse by the terrorist attack on the U.S. on September 11, he said.
"If the petroleum price continues to be low, investment in the oil exploration and production would also be low, which in turn would affect future supply," he said.
However, he saw the current oversupply situation as "transitory" as many analysts had predicted a recovery in the global economy in the second half of next year.
"Next year the situation will be a bit better although the demand will be the same as this year," he added.
He urged cooperation from non-OPEC countries to stabilize prices.
"If the oil price collapses, all producers will suffer negative consequences because low prices do not discriminate between OPEC and non-OPEC countries," he said.
He said it was necessary to attain a certain level of prices for investment in oil production and exploration, apart from ensuring social stability in the oil producing countries.
He said OPEC, which supplies less than 40 percent of the total crude oil demand in the world, was not concerned about losing market share because it would continue to be a major provider of oil to the world in the future.
"If you see the forecast in the next 20 years, OPEC which has 800 billion barrels in reserve will be the main supplier in the world while non-OPEC producers will be reducing production in the period," he argued.
On the same occasion, Malaysia's Petroliam Nasional Bhd (Petronas) president and chief executive officer Mohd Hassan Marican said reducing production was not a simple matter, and
every country would have to take a look at its production capacity.
"We are looking for stability and sustainability of price for the long term. Volatility that exist in the industry today is not good for everybody (consumers and producers)," he added.
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