Retrieved From: Lexis Nexis, link here.
Date: October 22, 2008
Title: OPEC Secretary General Sees 'Huge Oil' Excess in 2009
Byline: Anna Shiryaevskaya
Section: MARKETS & DATA; Pg. 10 Vol. 86 No. 209
Length: 627 words
Link to relevant WorldOilNews blog posting here.
Moscow
OPEC Secretary General Abdalla el-Badri said October 21 there would be a "huge" overhang of oil in 2009 if action was not taken to bring oil markets into balance, and that while OPEC would try to balance the market, it might not be able to do so on its own.
Speaking to reporters in Moscow, Badri would not be drawn on the likely outcome of the oil producer group's emergency talks later this week in Vienna. Asked whether OPEC would agree to cut production and how any cut might be distributed among members, he said: "It has not been decided yet."
He said OPEC would try to balance the market but might not be able to do so without the help of non-OPEC producers.
"From the numbers we have there will be excess supply at the end of 2008" and the first and second quarters of 2009, Badri said.
"If things keep as they are now, there will be a huge oil excess in 2009," he said. "OPEC will try to balance the market, but OPEC alone may not be able to do it."
OPEC's Algerian President Chakib Khelil October 20 called on major independent producers Russia, Norway and Mexico to help share the pain of any output reduction.
Asked whether OPEC would ask Russia to cut exports in line with any OPEC decision to cut output, Badri said: "No. I am sure that they have information and that they will decide themselves."
Badri said OPEC had not been asked officially by any consumer country not to reduce output. "We have not received any official requests from any country," he said.
He rejected any suggestion that the group should refrain from taking action to prevent oil prices from falling further for fear of harming the fragile global economy. "We cannot bail [out] the financial crisis created by Mr. Gordon Brown and others in the United]States," he said, referring to UK Prime Minister Gordon Brown, who last week said it was "absolutely scandalous" that OPEC was considering cutting output (ON 10/20).
"If Mr. Brown is really concerned about his citizens he should really look into the taxes he imposes. He should really try to reduce the tax," he said, referring to the high taxes levied on refined products by Britain and other European governments.
Badri continued: "I have no doubt that the financial crisis created in the [United] States and then spread to the EU and other countries will affect everybody. Some of them will be very affected, some of them will be touched. But everybody will see the heat one way or the other."
The Chinese, Badri said, would be least affected by the financial crisis. But, he said, "they are not immune."
Badri declined to indicate what price level or range OPEC would defend, saying only that the group wanted neither a very high nor a very low price.
OPEC had insisted during the runup to July's records that oil prices were being driven by a number of non-fundamental factors, including speculation on futures markets. During his Moscow news briefing, Badri called for speculation to be controlled.
"We have been seeing at the end of 2007 and in 2008 abnormal speculation in the market, and people should really control it," he said.
Badri arrived in Moscow October 21 for talks with senior Russian officials and to participate in a conference and workshop. His agenda will include discussion of a Russian proposal for cooperation between Moscow and OPEC.
"Russia is a very important oil producer," he said. "We are interested in what Russia is doing and Russia is interested in what we are doing."
There were a lot of challenges in the oil and financial markets as well as technology and the environment, and OPEC and Russia would examine how they might cooperate to tackle these challenges, Badri said.
Russia will not attend OPEC's October 24 meeting, Badri said, noting that no observers would be present.
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