Producers' cartel the Organization of the Petroleum Exporting Countries has done everything it can to tame oil prices and now consumer nations must act, Libya's oil minister said on 21th September. OPEC on 20th September decided to leave its official output ceiling unchanged, but said it would make available its spare capacity of two million barrels per day (bpd) should the market need it. "We have done everything we can. This is time for the others to do what they can do," Fathi Omar Bin Shatwan told Reuters.
He said governments of consumer nations could take measures such as lowering taxes, bringing on more oil refining capacity and helping to ensure stability in oil producing nations.
"Producing countries should be safe and secure," Shatwan said. "What happened in Iraq, Iran ... and now Nigeria are examples... Producing countries need to be safe and secure."
Following the arrest of militant leader Mujahid Dokubo-Asari, Nigeria was facing the threat of unrest in its delta region, which accounts for the bulk of the OPEC member's oil output of 2.4 million bpd.
Together with news Hurricane Rita was accelerating towards oil infrastructure in the United States, the uncertainty helped support prices above $67 a barrel for U.S. light sweet crude, close to the record of $70.85.
U.S. refineries are still struggling to recover from the devastation of Hurricane Katrina that struck at the end of August, aggravating a chronic shortage of refined products, while supplies of unrefined crude are more than adequate.
"We are giving the patient the wrong medicine. The patient does not need crude oil. The patient needs products. This is the problem," Shatwan said. "Refining capacity is limited in the world. The storm is limiting even more the available refining capacity."
Prices of refined products have also been inflated by high levels of taxation, especially in Britain, whose government is making more profit from oil than OPEC countries, Shatwan said.
"Each dollar we are making from oil, the British government gains more than $3," he said.
Should high prices erode world economic growth and in turn destroy demand for oil, potentially bringing prices crashing down, the impact on Libya could be particularly severe because its economy is heavily dependent on oil. Shatwan said the nation was seeking to diversify its revenue sources by developing agriculture and tourism, for instance. It is also looking to develop its under-explored oilfields by bringing in international investors and is about to conclude its second international licensing round since the lifting of international sanctions against the country.
Bids have to be submitted by October 2 and Shatwan said the round had received a very favourable response. In the first round, awarded at the end of January, U.S.-based Occidental Petroleum was the biggest winner, but Shatwan stressed Libya would welcome bids from companies the world over. "We are talking to companies from Europe, India, Japan and Latin America," he said.
Source: Reuters
