OPEC may lose $600b due to carbon tax

JAKARTA (JP): The secretary general of the Organization of Petroleum Exporting Countries (OPEC), Rilwanu Lukman, said here yesterday OPEC could lose US$600 billion in potential revenues by 2020 due to the carbon tax imposed by OECD.

Lukman said the carbon tax imposed in the Organization of Economic Cooperation Development (OECD) countries would cut worldwide demand for crude oil to between 85 million and 87 million barrels per day (bpd) by that year.

According to an OPEC forecast, the world demand for crude oil would increase by 37 percent to more than 95 million bpd by 2020 with OPEC accounting for 52 percent of the world's oil market, up from roughly 40 percent at present.

World demand for crude oil stood at 73.48 million bpd last year, 23.033 bpd of which were supplied by OPEC members.

"OPEC could lose around $600 million in cumulative revenues over the 25 years from 1995 to 2020," Lukman said in his speech at the ASEAN Council on Petroleum (ASCOPE) Conference and Exhibition '97.

The four-day conference and exhibition at the Jakarta Convention Center, South Jakarta, was opened yesterday by Vice President Try Sutrisno.

OPEC groups Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Iran, Indonesia, Nigeria, Libya, Algeria and Iraq.

The loss in potential revenue would considerably impact OPEC economies and would reduce the capability to expand their oil production, he said.

This, in turn, would result in oil supply shortages and price volatility as OPEC has roughly three-quarters of the world's proven crude oil reserves, Lukman warned.

Lukman emphasized that OPEC was concerned about the environment but the organization believed that rather than adopting negative policies to suppress the use of fossil fuels, developed countries should concentrate on encouraging the production of cleaner fuels and energy use efficiency through the application of improved technologies and processes.

Lukman called on the international community to give due recognition to the needs of OPEC members, which were mostly developing countries, to derive revenue from oil in formulating environmental regulation.

Lukman arrived here Sunday to attend OPEC's 103rd ministerial meeting from Nov. 26 to Dec. 1 at the Dharmawangsa Hotel, South Jakarta.

The meeting will discuss several topics, including Saudi Arabia's proposal to raise OPEC oil-supply quotas and the restructuring of OPEC's organization. The ministers will also elect a new OPEC secretary general.

Lukman refused to comment on the raising of the quota yesterday, saying the issue would be decided on during the meeting.

Saudi Arabia has proposed that OPEC anticipate the growth in world oil demand by increasing the quota at least 2.32 million bpd next year, but most OPEC member countries have thus far disagreed with the proposal.

Lukman also refused to talk about his prospect of being reelected as OPEC's secretary general for the next three-year term, but he said he was ready to do the job if the ministers reelected him. (jsk)