OAPEC plans to raise oil output
Oil-producing Arab countries intend to boost their output from the current 32.2 percent of the world oil market to between 38 and 40 percent by 2010, the Organization of Arab Petroleum Exporting Countries (OAPEC) has said. In its July 2005 editorial, OAPEC said plans must take into account the forecast rise in world demand for oil in this and subsequent years.
OPEC’s latest estimates put world oil demand in 2005 at 83.9 million b/d, while the US Energy Information Administration puts it at 84.7 million b/d, rising to 86.7 million b/d in 2006, of which 60% will be met by heavy crude. The rise in demand is expected to continue in coming years owing to several factors. The IMF predicts a 4.3% growth in the world economy this year, despite fears of financial imbalance and inflationary trends.
Against this backdrop of developments in the world energy market, oil consumers and companies are turning their attention once again to the Arab region and Iran to meet their growing oil requirements, the monthly said. This region possesses 71% of the world’s proven oil reserves (786 billion barrels) and 46.5% of the world’s natural gas reserves (79.7 trillion cubic meters).
These massive reserves mean the region is well-placed to raise its oil production capacity and utilize its surplus production capacity to calm market jitters. Saudi Arabia stands at the forefront, since it alone possesses 1.5 million b/d of surplus production capacity and could raise its production in future to between 12.5 million and 15 million b/d. Moreover, other Arab oil producers are planning to boost their production, which will raise their combined share of the oil market from 32.2% at present to at least 38%-40% by 2010.
A Saudi-Aramco study estimates that investments of at least $421 billion will be needed to achieve this goal through the building of huge energy projects in the Middle East in coming years. By country, the investments required are $130 billion in Saudi Arabia, $95 billion in the UAE, $80 billion in Iran, $46 billion in Qatar, $35 billion in Kuwait, $15 billion in Iraq, and $10 billion each in Bahrain and Oman. Moreover, investments running into tens of billions of dollars will be needed to develop energy projects in Egypt, Libya, and Algeria.