Oil price not delaying global recovery, says Kuwait
Kuwait's Oil Minister stressed that OPEC would intervene if oil prices top $100 per barrel.
April 27, 2010 9:14 by Katherine Azmeh
Kuwait Oil Minister Sheikh Ahmad Abdullah Al-Sabah said on Monday that current oil prices of $75 to $85 a barrel do not hamper the global economic recovery.
“So far in 2010, we have witnessed a stable level of oil prices at between $75 and $85 a barrel,” the minister told the opening session of the 18th Middle East Petroleum and Gas Conference.
“This price will not create hurdles for the world economic recovery,” said Sheikh Ahmad.
Oil prices extended gains in Asian trade Monday after a rise in US home sales stoked optimism for a firmer rebound in the world’s biggest economy, analysts said.
The Kuwaiti minister, whose country is OPEC’s fourth largest exporter, said OPEC will step in to raise output if oil prices soar above $100 a barrel.
Sheikh Ahmad said Kuwait will continue to invest in crude capacity increases to reach its target of four million barrels per day by 2020. “Our current production capacity is 3.1 million bpd and if compared with our quota of about 2.2 million bpd, it means we have a capacity surplus of around one million bpd,” he said.
Al-Sabah said global oil demand over the next five years would grow 5 million bpd, putting annual demand growth at about one million bpd, he said.
China and India were contributing to the growth dynamo from Asia, Al-Sabah said. Kuwait ships most of its exports to Asia.
The minister said Kuwait is targeting 3.5 million bpd in 2015 and four million bpd by 2020 and “we plan to sustain it until 2030.”
Meanwhile, the chief of Saudi Aramco said the Kingdom has close to 4 million barrels per day (bpd) of spare oil production capacity on hand.
Khalid Al-Falih, the chief executive of Saudi Aramco, said in a speech on April 19 to the Massachusetts Institute of Technology Club, Saudi Arabia, that the recently completed upstream expansion program had put production capacity at 12 million barrels per day (bpd).
“This spare capacity alone equals the exports of two typical large producers of oil, and helps assure oil market stability during unforeseen circumstances,” Al-Falih said in his speech just posted on Aramco’s website
Al-Falih said oil still accounted between 80 and 90 percent of the country’s total revenues. “Oil will continue to play a major role in the Kingdom’s economy for the medium term, which I would consider to be the next several decades, while industrialization steadily increases and economic diversification grows,” he said.
Kuwait, which discovered nonassociated natural gas for the first time in 2006, is still on target to produce one billion cubic feet (28 million cubic meters) per day of non-associated, or free gas in 2016.
The emirate currently produces around 140 million cubic feet per day of nonassociated gas, but this is way behind its original target for 2010 of 200 million cubic feet per day. As a result, Kuwait in February signed a technical service agreement with Shell to develop its difficult free gas reserves.
Sheikh Ahmad said Kuwait “encourages other IOCs (international oil companies) to follow the Shell example,” adding that the emirate is in talks with a number of oil majors and hopes to make an announcement shortly.
The chief executive officer of Kuwait Petroleum Corp. (KPC) Saad Al-Shuwayeb told reporters that Kuwait also produces one billion cubic feet of associated gas alongside its crude oil output.
But despite its abundant reserves, the emirate still has a gas shortfall due to rising domestic power consumption and started to import liquefied natural gas by vessel in significant quantities at the beginning of April.
It plans to import an average 500 million cubic feet per day of LNG until the end of October, according to Shuwayeb.