Shrinking OPEC share may slow Asian growth

Shrinking OPEC share may slow Asian growth

SINGAPORE (Reuter): OPEC Secretary General Rilwanu Lukman said yesterday that the oil group's declining market share could lead to volatility in oil prices, which in turn could slow the economic growth of developing Asian nations.

Without coordination between Organization of Petroleum Exporting Countries (OPEC) and non-OPEC members on the problem of oversupply, the world may face unstable prices and fluctuating supply levels, he told the Asia-Pacific Petroleum Conference.

"Without OPEC oil, energy growth and therefore the economic growth of Asian countries may be adversely affected."

However, Lukman stressed that OPEC would not abandon its policy of maintaining stable market supplies.

"OPEC has been losing market share and its policy of seeking market stability is being undermined," Lukman said.

"But that does not mean we will abandon our policy of pursuing market stability and providing stable volumes of oil at reasonable prices," he added.

"We have called upon non-OPEC producers to help share the burden of maintaining market discipline," he said.

Excluding Japan and other Organization for Economic Cooperation and Development (OECD) Pacific countries, Asian oil demand is expected to grow by about five percent annually from 1995 to 2010.

Rising oil demand will see net imports to Asia surpass 12 million bpd by 2010 -- more than a third higher than in 1993.

The incremental oil demand in the Asia-Pacific is likely to exceed the growth rate in non-OPEC production.

"OPEC has around three quarters of the world's oil reserves, and is therefore the most likely source of the extra oil which will be required in the Asia-Pacific and elsewhere in the years ahead," Lukman said.

But if non-OPEC producers do not exercise some restraint, OPEC members will be left with fewer financial resources to develop their oil, he said.

He added that OPEC countries have a stake in helping Asia develop its oil markets.

"OPEC member countries, particularly those in the Middle East, are well placed to meet the growth of demand in this region."

"That means they also have a strong interest in the development of the Asian downstream sector, and have the expertise to offer to Asian countries which are developing their upstream activities," he said.

Lukman said that there was substantial room for cooperation between OPEC and Asia-Pacific as both could benefit from the development of Asia's growing national petroleum sectors and from investments in distribution and infrastructure projects.

"OPEC will not spare any effort to fulfill its role of supplying Asia's growing requirements for oil at a reasonable price and I am sure Asia will support us in the challenge," he said.