The Hindu Business Line : India, China cannot be blamed for crude price volatility: OPEC

We don’t disagree on the need to discuss production levels but that’s not going to happen now, it will happen in December. – Mr Abdalla Salem el-Badri

Richa Mishra

Riyadh, Nov. 15 The Organisation of Petroleum Exporting Countries (OPEC) said that while it does not see the need to add more oil to the market at the moment, it felt that large consumers such as India and China cannot be blamed for the volatility in the international crude prices.

Responding to the US Energy Secretary, Mr Samuel Bodman’s statement on Tuesday asking OPEC to raise its crude oil production to address falling oil stock levels and high oil prices, the OPEC Secretary-General, Mr Abdalla Salem el-Badri, said a discussion on oil production levels will take place at the OPEC meet on December 5 at Abu Dhabi.

“We don’t disagree on the need to discuss production levels but that’s not going to happen now, it will happen in December. It is up to the Ministers to decide,” he told media persons at the third OPEC Summit here.

Mr Badri also stated that the growing demand in India and China cannot be indicated as one of the factors for rising crude prices. “There are other factors,” he said.

Misconception

The other problems include the falling dollar, interest rates and geopolitics. Coupled with these factors are the misconceptions in certain quarters regarding limited production capacity and world oil reserves, creating an element of fear in the market which is driving the prices higher. “We welcome the growth in these countries. OPEC is ready to meet their demands,” he said.

OPEC countries meet 85 per cent of the India’s crude import. Of the total 111.502 million tonnes (mt) which the country imported in 2006-07, imports from 12 OPEC countries stood at 95.032 mt.

The International Energy Agency (IEA), an energy policy adviser for its 26-member countries, including the US, Canada, Australia and 19 European nations including Germany and Britain, said that economic growth in China and India was partly responsible for a worsening in the long-term outlook for energy supplies.

On the issue of IEA reducing its demand forecast for the final quarter of the current fiscal by 500,000 barrels a day to 87.1 million, and cutting 300,000 barrels off its forecast for 2008, Mr Badri said, “There is no shortage of oil. IEA keeps changing its projections from quarter to quarter and our projections are not very different from them at the end of the year.”

Stressing that OPEC was not responsible for the surge in international crude prices, he said, “OPEC is neither in favour of high or low oil prices. High prices are not a bonanza for OPEC, as cost of operations also increases. What we prefer is a stabilised market which is good for both producers and consumers.”

As regards policies adopted by some countries to sell petroleum products at a controlled price, he said, “We don’t interfere with consuming countries pricing policies”.