• Abstract and Figures
• Public Full-text

This month’s cover ... shows a night view of the Egyptian capital Cairo, site of December’s OPEC Conference (see p4) Photo: Bassem Wahaba, Philippe Photo Trade, Cairo Vol XXXV, No 9 ISSN 0474-6279 November/December 2004 03 Commentary Pyramid scheme 04 Conference Notes OPEC agrees to cut overproduction by 1.0m b/d Bassem Bassem Wahaba OPEC cuts overproduction (p4) 12 Features Margarita hosts OPEC upstream contract workshop Interview: HE Rafael Ramírez (p18) OPEC Members rise to the challenge of expanding Keith Keith Marchant production capacity (p20) Interview: Diane Munro (p26) IMF and OPEC share analysis, ideas at the Secretariat (p34) Margarita hosts contracts meeting (p12) Russia ratifies Kyoto Protocol (p38) 42 Newsline Rafael Ramírez takes over role of PDVSA President Saudi Arabia finds more hydrocarbon reserves (p44) Oil and gas news from OPEC (p46) AP Photo/Gustavo Ferrari OPEC Members expand capacity (p20) 54 Member Country Focus Iran’s progress on nuclear freeze good, but incomplete Development and economic news from OPEC (p56) 62 Market Review Covering September/October 88 OPEC Fund News 94 Noticeboard Reuters/Ali Reuters/Ali Jasim Iraqi elections in January (p58) 95 Obituaries November/December 2004 1 COMMENTARY Publishers Editorial policy OPEC The OPEC Bulletin is published by the Public Organization of the Petroleum Exporting Relations & Information Department. The Countries, Obere Donaustrasse 93, contents do not necessarily reflect the official 1020 Vienna, Austria views of OPEC or its Mem ber Countries. Names Telephone: +43 1 211 12/0 and boundaries on any maps should not be Telefax: +43 1 216 4320 regarded as authoritative. No responsibility is Public Relations & Information taken for claims or contents of advertisements. Department fax: +43 1 214 9827 Editorial material may be freely reproduced (un- E-mail: [email protected] Secretariat officials less copyrighted), crediting the OPEC Bulletin E-mail: OPEC News Agency: [email protected] as the source. A copy to the Editor would be Web site: www.opec.org Secretary General appreciated. Hard copy subscription: $70/year HE Dr Purnomo Yusgiantoro Editorial staff Membership and aims Indonesian Governor for OPEC Acting for the Secretary General Editor-in-Chief OPEC is a permanent, intergovernmental Or- Dr Maizar Rahman Dr Omar Farouk Ibrahim gan i za tion, established in Baghdad, September Editor 10–14, 1960, by IR Iran, Iraq, Kuwait, Saudi Director, Research Division Graham Patterson Arabia and Venezuela. Its objective is to co-ordi- Dr Adnan Shihab-Eldin Deputy Editor nate and unify petroleum policies among Mem- Philippa Webb-Muegge ber Countries, in order to secure fair and stable Head, Data Services Department Production prices for petroleum producers; an efficient, Dr Muhammad A Al Tayyeb Diana Lavnick economic and regular supply of petroleum to Design consuming nations; and a fair return on capital Head, Administration & Elfi Plakolm to those investing in the industry. Human Resources Department The Organization comprises the five Senussi J Senussi Web site: www.opec.org Founding Members and six other Full Mem- bers: Qatar (joined in 1961); Indonesia (1962); Head, Energy Studies Department Visit the OPEC Web site for the latest news SP Libyan AJ (1962); United Arab Emirates Mohamed Hamel and in for ma tion about the Organization and its (Abu Dhabi, 1967); Algeria (1969); and Member Countries. Recent and back issues of Nigeria (1971). Ecuador joined the Organiza- Head, PR & Information Department the OPEC Bulletin are available free of charge tion in 1973 and left in 1992; Gabon joined Dr Omar Farouk Ibrahim on the site in PDF format. in 1975 and left in 1995. Head, Petroleum Market Analysis Contributions Department Mohammad Alipour-Jeddi The OPEC Bulletin welcomes original contri- butions on the technical, financial and en vi - Senior Legal Counsel ronmental aspects of all stages of the energy Dr Ibibia Lucky Worika industry, including letters for publication, research reports and project descriptions with Head, Office of the Secretary General Indexed and abstracted in PAIS International supporting illustrations and photographs. Karin Chacin Printed in Austria by Ueberreuter Print and Digimedia Advertisements The OPEC Bulletin reaches the decision-makers in Member Countries. For details of its reasonable advertisement rates see the appropriate page at the end of the magazine. Orders from Member Countries should be sent directly to the Editor-in-Chief at the Secretariat address. Otherwise, orders should be placed through the Advertising Representatives, whose contact details are at the end of the magazine. 2 OPEC Bulletin November/December 2004 3 COMMENTARY Pyramid scheme OPEC’s decision in Cairo to cut overproduction should help to arrest the recent price slide As the eleven OPEC Ministers of Oil and Energy gathered in the Thus, in recent months, we have seen prices rise to record highs Egyptian capital Cairo for the 133rd (Extraordinary) Meeting of the on the back of what the media is fond of referring to as an “explo- Conference, they were facing something of a dilemma. Oil prices, sive cocktail” of circumstances, and a robust OPEC response in the which had remained strong throughout the year on a well-known form of overproduction in order to restore stability to the market. combination of fundamental and non-fundamental factors, had As prices rose ever higher, it would have been very tempt- suddenly taken a steep tumble. The price of the OPEC Reference ing for OPEC to forget about spare capacity and open the taps Basket of seven crudes had fallen from the highs of more than wide, pouring more and more crude into the market in the hope $46/barrel that it hit in October to less than $34/b by the time that somehow this would calm things down. Wisely, the Organi- of the Conference, indicating that the market was oversupplied. zation’s Members resisted that temptation, maintaining a deli- On the other hand, it would have been counterproductive to risk cate balance while meeting the needs of the market. Their suc- a move that could have sent prices shooting back up to record cess in doing so, noted the final communiqué, was reflected in highs. To cut, or not to cut? That was the question. the fact that “the market remains well supplied, the adequacy The decision of the Cairo Conference was, in fact, to reduce of supply evidenced by the continued replenishment and build- the overproduction by 1.0 million b/d from current actual out- up of commercial oil stocks.” put, with effect from January 1 next year. At the same time, the As demonstrated by recent events, maintaining a balance in overall ceiling and individual production levels for the OPEC-10 the crude oil market is no simple task. Unsurprisingly, there is (excluding Iraq) of 27m b/d will be maintained. While the final no simple solution either, no magic formula to maintain market communiqué did note that “current crude oil prices reflect con- stability. vergence towards market fundamentals”, it also underscored The only method that has been found to be effective is to the importance of the cut in overproduction, which was taken constantly monitor developments as closely as possible and to “in order to prevent crude oil prices continuing to deteriorate to be prepared to take any necessary action swiftly. Thus, OPEC will undesirably low levels.” be meeting in Vienna at the end of January to assess the market In a market that can be influenced by fundamentals and non- situation, and again in the Iranian city of Isfahan in mid-March. fundamentals, or — as is often the case — a combination of both, After all, to keep abreast of the oil market is a monumental task it can be hard to discern which particular factors constitute the — as monumental, some would say, as the pyramids of Egypt driving force (or forces) behind price movements at any one time. themselves. 2 OPEC Bulletin November/December 2004 3 133rd OPEC Conference in Cairo agrees to cut overproduction by one million b/d by Graham Patterson Their Excellencies the Ministers and Heads of Delegation pose under a Cairo Conference poster (from left): Nigeria’s Dr Edmund M Daukoru, Syria’s Prof Dr Ibrahim Haddad, the UAE’s Mohamed Bin Dhaen Al Hamli, Qatar’s Abdullah bin Hamad Al Attiyah, Russia’s Dr Andrei G Reus, Indonesia’s Dr Purnomo Yusgiantoro, Sudan’s Dr Awad Ahmed Al Jazz, Saudi Arabia’s Ali I Naimi, Egypt’s Eng Amin Sameh Fahmy, Iran’s Bijan Namdar Zangeneh, Algeria’s Dr Chakib Khelil, Venezuela’s Rafael Ramirez, Libya’s Dr Fathi Hamed Ben Shatwan, Oman’s Nasser bin Khamis Al-Jashmi, Angola’s Desidério da Graça Veríssimo e Costa, Iraq’s Abdulilah Kasim Al-Amir, and Kuwait’s Sheikh Ahmad Fahad Al-Ahmad Al-Sabah. 4 OPEC Bulletin November/December 2004 5 OPEC decided to reduce over- production by one million barrels/ day from current actual output levels when it met in the Egyptian capital Cairo on December 10. The decision is effective from January 1, 2005. 4 OPEC Bulletin November/December 2004 5 Above: Dr Purnomo (r) and Dr Rahman at the press conference The current OPEC-10 production ceil- ing of 27m b/d and the individual produc- tion levels would remain unchanged, said the final communiqué, adding that stocks were back to normal and prices had mod- erated ahead of the winter season, when inventories are normally withdrawn. In recent weeks, the price of the OPEC Reference Basket has fallen sharply from the peaks of over $46/b which it hit in October to under $34/b by the time of the Cairo Meeting, a loss of around $12/b. Speaking at the closing press confer- ence, the OPEC Conference President and Secretary General, HE Dr Purnomo Yus- giantoro, noted that oil demand was ex- pected to be weakest in the second quarter of 2005 at around 82.0m b/d, hence the need to take measures to reduce overpro- duction.

Load more

  97

Copy Link