Tue, 24 Jun 2003

OPEC needs to cut oil output, BP says

Fitri Wulandari, The Jakarta Post, Jakarta

Anglo-American energy giant BP Plc said the Organization of Petroleum Exporting Countries (OPEC) would cut oil output in the fourth quarter of the year to stop oil prices from falling once Iraq oil entered the market.

BP Plc. energy analysis head Michael D. Smith said once Iraq's output would account for an additional 2 million barrels per day (bpd), on top of the current output of 25.4 million bpd by the end of the year.

Smith said the current Brent crude price of between US$26 to $27 per barrel was "not fundamentally strong" as it was caused by low oil stocks, particularly in the U.S. market.

"It (the low stock) helps underpin the price of oil. But the supply is now coming back.

"If Iraq comes back to the market, we'll have more supply of crude. Then, unless OPEC takes some action to reduce their production, we are like to see some movement (on the price)," Smith told reporters during the presentation of BP's 2003 Statistical Review of World Energy in Jakarta.

Smith added cutting output was necessary for OPEC to defend its price target of between $25 to $26 a barrel.

In its recent ministerial meeting in Doha, Qatar, OPEC decided to maintain its current output until the next meeting scheduled for September this year.

Meanwhile, BP's Statistical Review of World Energy says Indonesian oil production was down by 8.1 percent in 2002 or 1,278 bpd compared to 1,389 bpd in 2001.

The country's oil consumption also fell 1.7 percent or 1,072 bpd in 2002 from 1,090 bpd per day.

However, Indonesia's natural gas production is up by 6.4 percent or 66.3 billion cubic metres in 2001 to 70.6 billion cubic metres in 2002.

Natural gas consumption also increased 4 percent from 33.4 billion cubic metres in 2001 to 34.7 billion cubic metres in 2002.

Globally, the energy giant noted primary energy consumption in 2002 was up by 2.6 percent, well ahead of the ten-year growth trend of 1.4 percent annually.

The growth behind energy demand was fueled by energy demand in China which accounts for 20 percent of world demand.

Outside China, energy demand grew by less than one percent in 2002, which reflected a second year of below-trend economic growth, with Europe and Japan recording the weakest demand.

Energy consumption growth in emerging economies had been particularly robust during 2002, the review says. Non-OECD Asia Pacific (excluding Japan, South Korea and Australasia) countries experienced growth of almost 11.5 percent.