Attiyah sees ‘oil supply crisis’

HE the Deputy Premier Abdullah bin Hamad al-Attiyah has said the declining oil prices would not encourage companies and oil producers to invest in the energy sector leading to future supply crises.
“We have already started hearing about countries and oil companies either putting projects on hold or abandoning them altogether. None of them will invest in non-economical projects if the prices remain so low. This will create supply crisis when the global economy recovers, triggering demand yet again,” he said in his opening remarks at the GCC energy ministers meeting at the Sheraton last night.
Earlier, speaking to reporters al-Attiyah said he was not surprised by a recent fall in oil prices after an Opec output cut, saying the decline was due to the global economic slowdown.
“This is a cycle, you know, it is related to the world economy,” al-Attiyah said.
It would take some time to measure the depth of the global recession and determine the length of time it would take for Opec cuts to draw down inventories and balance the market, he said.
“We will have to wait until the first quarter to see more clearly the world economy,” Attiyah said.
Attiyah said he was confident that Opec members would make the deep cuts in supply that they have pledged. He said compliance with previous reductions was over 80%.
Reuters quoted al-Attiyah as having said were no plans at present for Opec to meet before its next scheduled gathering in Vienna in March.
US oil settled at its lowest level in more than four years on Friday, just two days after the Organisation of the Petroleum Exporting Countries agreed to its deepest-ever supply cut to stem the slide in oil prices, the agency said.
The economic recession has eaten into oil demand and caused prices to fall more than $100 from their July peak.
Saudi Arabia’s Oil Minister Ali al-Naimi said one should not doubt Opec’s ability to restore the oil market. He was replying to a query on whether the Opec members would stick to the promised cut in production at their two previous meetings in Austria and Algeria.
GCC Secretary-General HE Abdulrahman bin Hamad al-Attiyah said a draft law on unified mining procedures was being discussed by the energy ministers of the six Gulf countries.