Saudi King Abdullah bin Abdel-Aziz opened a global oil summit Sunday, launching an initiative to help poor countries cope with high fuel prices, including $500 million in soft credit, and vowing to pump more oil to meet any additional demand.
King Abdullah said the World Bank and donor organizations should convene as soon as possible to discuss mechanisms to implement the Saudi-proposed energy initiative. The king, whose country is the world’s biggest oil exporter, proposed a $1-billion fund to be set up by the development fund of the Organization of Petroleum Exporting Countries (OPEC) to bankroll energy projects for poor countries.
The Saudi development fund would offer $500 in easy credit to developing countries suffering from the effects of soaring oil prices, which have reached nearly $140 per barrel (bpd). The monarch reiterated his country’s position that Riyadh would meet any additional demand for oil by pumping more crude. He also announced that his country has increased output to 9.7 million bpd in the past few months.
Current price surges are mainly caused by “selfish” market speculation, rising demand in some countries and an increase in global consumption, he said, dismissing accusations that supply shortages are the cause. Ahead of the summit, Kuwait’s Minister of Oil Mohamed Abdel-Hadi al-Alim said his country would not hesitate to raise its oil output if the market needs it. “Kuwait will discuss its production policy after the Jeddah meeting. We will be able to decide whether we need to call for a closed OPEC meeting to discuss the issue,” al-Alim said. But industry experts say with the exception of Saudi Arabia other OPEC producers have little extra capacity.
Kuwait, which produces 2.6 million bpd, can produce an extra 40,000 barrels until new oil fields come online, industry analysts estimate. The United Arab Emirates has drawn out plans to increase production to 4 million bpd from the current level of 2.6 million but the goal is likely to be achieved some time after 2010, according to analysts. But other OPEC producers say the market is well supplied and an output increase would not be decided during the Jeddah meeting.
Ahead of the meeting, OPEC President Chakib Khelil, who is also Algeria’s Minister of Energy, told the Dubai-based al-Arabya news broadcaster that OPEC would have to wait until its ministers meet in September to take a decision on any change in output. Libya’s senior oil official, Shokri Ghanim, told al-Arabya his country might cut output in response to threats made by the United States and other consumer countries to OPEC members, such as Iran.
The Jeddah summit is being attended by ministers from 35 countries as well as senior executives from major oil firms. Among the participants is British Prime Minister Gordon Brown who announced a four-point plan at the opening of the meeting to create a “more balanced energy market.” Brown’s plan calls for action to increase efficiency of international oil markets in order to reduce volatility of oil prices. “Whenever there are shortages and gaps, they are addressed,” he explained. Under the plan, an efficient use of the world’s existing oil reserves is sought and the switch to alternatives sources of energy would be accelerated. Brown also wants Saudi Arabia and other oil producers to invest some of an estimated $3 trillion they have earned out of the recent oil price surge into new nuclear technology. Echoing other consumers, such as the US, Brown called for an oil output boost to curb price upward movement. (c&m.com)