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Secretary Bodman urges OPEC to show capacity plans. - Nov. 12, 2005

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Energy Secretary to OPEC: Reveal plans
Oil cartel should reveal capacity plans, says Bodman during Gulf visit
November 12, 2005: 5:34 PM EST

ABU DHABI (Reuters) - U.S. Energy Secretary Sam Bodman on Saturday called on OPEC to keep oil markets well supplied and urged Gulf producers to spell out their plans to expand production capacity.

Bodman, on a tour of Gulf members of the Organization of the Exporting Countries (OPEC), also said high oil prices appeared to have caused "some dampening in demand".

"I would hope that the (OPEC) ministers would see fit to continue supplying the market," Bodman told reporters in the United Arab Emirates.

He urged Gulf Arab states to issue a joint statement detailing plans to increase oil output and refining capacity.

"The world would know and have increased confidence that there will be production made available in the future," he said. "If everybody has the same information, then you have orderly markets and you tend to have less volatility in prices."

"The goal is to have a more stable pricing environment where you do not get big spikes, either up or down," Bodman added. "That enables companies or countries to make more rational decisions on whether they should expand and if so how rapidly."

Oil prices fell below $58 on Friday to the lowest level since July as swelling fuel stocks eased consumer fears of tight winter supplies. U.S. oil prices are more than $13 below a late-August record of $70.85.

December meeting

OPEC meets in Kuwait in December and the cartel has yet to signal at what level it would consider cutting output to shore up prices.

At its last meeting in September, OPEC agreed to offer the market all its spare capacity, the lion's share of which is held by Saudi Arabia, from Oct. 1 for three months, but says there have been no takers.

"We're clearly in a situation where the supply to the market has had difficulty keeping up with demand. It would appear because of high prices we've had some dampening in demand," Bodman said.

He said some 800,000 barrels per day (bpd) of offshore oil production in Louisiana, around 4 percent of total U.S. consumption, remained shut due to hurricanes.

Bodman, representing the world's biggest energy consumer, is also expected to visit Qatar, Kuwait and Saudi Arabia. He said he would also discuss the role that U.S. firms can play in helping countries in the region, which sits on nearly half the world's proven oil reserves, develop their oil and gas sectors.

Saudi Arabia, the world's largest oil exporter and one of the top suppliers of crude oil to the U.S. market, has said it intends to boost output capacity to 12.5 million bpd from 11 million bpd now by 2009 and then gradually ramp up production capacity to 15 million bpd.

The International Energy Agency, energy adviser to industrialized nations, this week said the kingdom might need to pump as much as 18 million bpd by 2030 to meet booming demand.

"We will use Saudi Arabian oil for some time to come. But the goal is to recognize that at some point in time ... we will have to recognize that oil and natural gas, we will run out of it in the world," Bodman said. "So we must make plans for it."  Top of page

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