MercoPress. South Atlantic News Agency

Oil summit: more investment needed for “adequate” supply

Leading oil exporters have acknowledged the need to boost supplies to curb soaring prices but stopped short of specific commitments on extra output. Following their week end crisis summit in Saudi Arabia, officials noted price levels were “hostile” and more investment was needed to ensure “adequate” supplies.

Saudi Arabia blamed speculation, not lack of supply, for surging prices but said it was willing to raise output. The US, UK and other major consumers of oil have urged producers to boost supply, blaming lack of capacity for the recent price surge. In a statement issued at the end of the meeting in Jeddah, officials from OPEC oil exporters and consumers said "an appropriate increase in investment" in production was needed to ensure that the markets were "well supplied in a timely and adequate manner". The final communiqué made no reference to immediate action to cool prices, which have surged more than 40% this year alone. But Saudi Arabia said it would be prepared to pump more oil "if demand for such quantities materializes and our customers tell us they are needed". The world's largest oil producer has already announced plans to lift daily quotas to 9.7 million barrels by the end of July, an increase of about 500,000 barrels since May. Saudi officials also indicated they could raise its oil "cushion" - the spare production capacity it maintains - above the current 12.5 million barrels per day planned for the end of 2009. "We are very concerned for consumers in all countries," Saudi King Abdullah bin Abdul-Aziz told the meeting in Jeddah, convened after prices rose 40% this year to close to 140 US dollars a barrel. "And we declare our readiness to meet any additional needs." Saudi Oil minister Ali al Naimi said the world has "sufficient oil reserves, both conventional and non conventional to address demand for many, many decades".- King Abdullah proposed that members of OPEC producers body could contribute one billion US dollars to a fund to help poorer countries deal with spiraling energy costs. The meeting, attended by energy ministers from more than 30 countries as well as senior executives from the world's largest oil companies, took place amid fears that recent record oil prices are helping tip the US and other major economies towards recession. Addressing the meeting British Prime Minister Gordon Brown called for a "new deal" on global energy supplies to benefit both consumers and producers. Better information was needed on the current state of global oil supplies and future demand, he said, while oil producers must diversify beyond oil by investing in other sources of energy, including renewable projects. He also called for "enhanced co-operation" between governments to reduce the global economy's dependence on oil. "I urge all oil producers to rigorously break down old barriers standing in the way of new strategic initiatives," he said. "We can make progress in easing the challenges which are facing so many countries in the months ahead." United States Energy Secretary Samuel Bodman said rising demand, especially from countries like China and India, was growing faster than supply and that this was pushing prices up. "I believe that most of us agree on one thing: Prices are too high at present," he said. "And unless we act, the situation will remain unsustainable." Analysts say recent increases in output by OPEC members are unlikely to have much of an effect on the price, given that the world's daily oil production is about 80 million barrels. Efforts to control the price received a further blow this week, following militant attacks on Shell and Chevron facilities in Nigeria which cut the country's output by more than 300,000 barrels a day. BBC