IEA looks to OPEC first to meet any Libya shortage
IEA director consulted Saudi, OPEC at IEF meeting.
February 23, 2011 11:40 by Reuters
The International Energy Agency will hold a regular meeting this week which will discuss the impact of supply disruption in Libya, but would only release oil from emergency stockpiles as a last resort, its head said.
Executive Director Nobuo Tanaka told Reuters OPEC would act first to fill any gap from member Libya with its own cushion of spare output capacity.
Only after that would the IEA contribute, if needed.
“With the IEA stocks, we can produce 2 million barrels per day for two years but these are stocks and once we use them, they will run out, unlike spare capacity,” Tanaka said. “That’s why the stocks are for great emergencies.”
“So if there are disruptions in Libya and OPEC steps in with an extra one million barrels, then the gap is covered,” he added.
The Organization of the Petroleum Exporting Countries has around 5 million bpd of spare output, mostly held by Saudi Arabia, against Libya’s production of roughly 1.5 million bpd.
“The IEA stocks will only be used if there is a need to fill an additional gap,” Tanaka said.
Tanaka met Saudi Arabian Oil Minister Ali al-Naimi and other OPEC oil ministers at the International Energy Forum in the Saudi capital on Tuesday.
Naimi gave him reassurances Saudi Arabia and OPEC would supply extra oil if there were a supply shortage. For now, he said, the market had enough oil.
The Paris-based IEA advises and coordinates energy policy for the industrialised nations of the Organisation for Economic Co-operation and Development (OECD).
It will reassess the state of the oil market at an IEA governing board meeting on Thursday and Friday, Tanaka said.
The body has a mandate to ask its members to release oil stocks in the case of emergency supply disruption, but has very rarely done so.
“Historically, they have only been used twice, once during the Gulf War and the other time was after Hurricane Katrina,” Tanaka said.
The IEA released refined products in 2005 when Hurricane Katrina crippled operations in the U.S. Gulf of Mexico.
Of the IEA members, Italy was most concerned about the loss of Libyan energy exports, Tanaka said. Italy’s Eni has been among the companies that have suspended output from their Libyan fields.
“Italy will also express their concerns about the situation in Libya since they import a lot of their oil from there,” Tanaka said.