Oil giants struggle to offset rising crude prices
Oil giants struggle to offset rising crude prices
Glenn McKenzie, Associated Press, Lagos, Nigeria
Leading oil exporters outside the Middle East have pledged to boost production to offset soaring world prices - but it could be months or years before Top 10 giants Russia, Nigeria and Mexico really manage to open their taps.
In all three countries, building projects to clear pipeline bottlenecks or boost production capacity are still works in progress, or not yet out of the talking stage.
In Nigeria, at-times violent attacks on installations in the oil-rich Niger Delta persistently limit drilling - forcing multinational giants to abandon a few wells and pipeline stations entirely.
Russia, Nigeria and Mexico are the world's Nos. 2, 7 and 9 oil exporters, according to U.S. Department of Energy rankings.
"On a longer term, at least one or two years, I think things will change - a big increase in production is possible," in those three nations, and in other African prospects, said Pieter Louw, a South Africa-based energy consultant.
"But in the short term, it's better to keep your little diesel car and don't expect big changes," Louw said. "Nothing faster than three months."
Weekend raids on Saudi oil compounds - heightening worries about security of Saudi oil - stand to make that timeline even more critical.
Most oil markets were closed on Monday, but one open in Tokyo indicated traders are concerned, with crude oil futures up.
A Tokyo-based oil broker told Dow Jones Newswires on Monday that the al-Qaida-claimed attack was expected to have an effect on world oil markets - where prices perched at US$40 a barrel last week.
In Qatar, Oil Minister Abdullah bin Hamad al-Attiya said on Monday that a "factor of fear" already had pushed up prices by $8 a barrel.
Visiting Moscow before the attacks, U.S. Energy Secretary Spencer Abraham cited the pledges of production increases from giants Russia, Nigeria and Mexico - saying he was puzzled why the market hadn't already responded more favorably.
That accumulation of production promises "should have a significant impact on world energy prices," Abraham insisted.
But the pledges seem a long way from being met - at least in ways the world would notice.
Mexico promised this month to do its part - but only by next year, when it has finished construction projects to boost capacity.
Even then, the immediate output would swell by only a marginal 2-4 percent.
Nigeria promised an extra 300,000 within 40 days, if the market wanted it.
Analysts are skeptical whether Nigeria - Africa's largest oil producer and the No. 5 source of U.S. oil imports - can go much beyond that modest target.
A member of the Organization of Petroleum Exporting Countries (OPEC), Nigeria already is nearly 300,000 barrels over its daily export quote of 1.93 million barrels.
Crime and violence by ethnic militias vying for a share of Nigeria's oil wealth mean production cannot really go much higher, African oil industry analysts say.
Armed attacks on installations and villages in the oil delta have cut about 7 percent of national production, in losses to Royal Dutch/Shell and ChevronTexaco alone.
Nigeria possibly could boost production to as much as 3 million in a year's time - at the risk of aggravating its oil- region violence, economist Bismarck Rewane said in Lagos, the commercial capital.
In Russia, the problems are peaceful ones - pipelines, and port facilities. Exports through the state-owned Transneft pipeline already are running at near-maximum capacity.
President Vladimir Putin pushed for stepped-up efforts to widen trade routes during his state of the union address last week.
With projects far from completion, industry experts agree any significant Russian export boost is at least three years away.