Tuesday, 23 December 2008The crude-oil related meeting of OPEC (Organization of Petroleum Exporting Countries) held in Oran, Algeria on December 17. The main purpose of the meeting was to cut the production of crude oil due to its high price and demand reduction in world market. As a result of the meeting in Algeria, ministers from OPEC came to the consensus to cut crude oil production by 2.2 million barrels per day. Since, crude oil price fell under 40 US dollar per a barrel for the first time during the last five years period.
OPEC challenged non-OPEC countries to decrease production level for obtaining stable global oil market. For that reason, President of OPEC Chakib Khelil invited non-OPEC oil producing countries, such as; Russia, Norway, Oman, Azerbaijan, and Mexico to join the oil cartel earlier this month. According to his speech, if these countries agree to act with OPEC, it will increase oil demand and prevent oil price decrease.
According to RIA Novosti, Azerbaijan is ready for cutting oil production 300.000 barrels per day for supporting OPEC. It was the first time the oil rich Azerbaijan attended to the meeting of OPEC as an observer. The country was represented by the Ministry of Industry and Energy Natik Aliyev. "We have production capacity of 1 million bpd, but currently output is reduced to 840,000 bpd and we are ready to cut further to 540,000 bpd and sustain this production for several months," Aliyev said.
BP-led consortium, which control mist of Azerbaijan oil production, told to APA news agency that, output in the past month has reduced by 468.000 barrel due to technical problems in Azeri-Chirag-Guneshli fields. Azerbaijan Ministry of Industry and Energy said that in the following month Azerbaijan could cut output by 300.000 barrels. He said that Azerbaijan has a capacity for producing 1 million barrels per days, but for supporting OPEC and preventing reductions of oil price, could not do it. "We are doing what we can to try to stabilize the markets," Aliyev said.
World’s second big oil producer Russia also attended this meeting. Deputy Prime Minister of Energy Igor Sechin represents Russia in this meeting. The main demand of OPEC from Russia was to cut oil production by 400.000 barrels in a day. The membership of the Russia to the organization was also expected.
During his meeting with Secretary General of OPEC in 22 October in Moscow, Russian president Dmitry Medvedev stressed the role of cooperation between Russia and OPEC countries for the aim of the achieving stable and predictable oil marked and price. And he also showed the Russian readiness for the dialog with the OPEC for decreasing crude oil production to regulate the oil price. This statement obviously shows that Russia is prepared to accept OPEC demands for coordinated output cuts of oil for increasing crude prices and also examine its long term political strategy in the oil market. The oil markets, mainly big consumers Europe and USA, were worried about participating of Russia in this meeting due to Russia and OPEC together produce 45% of world crude oil.
Russia was also expected to join consensus made by OPEC for cutting production, yesterday. However, the Russian Deputy Prime Minister, Igor Sechin, said yesterday that the country was not decided to cut its production and join to OPEC. He said that Russia output was already reduced because of the falling price, which affected countries’ economy badly. He also told reporters that Russia may cut its production by 350.000 barrels per day for supporting OPEC, if the price of oil continues to stay low level. The absence of a strong message from Russia and other non-OPEC oil producers disappointed the Organization of Petroleum Exporting Countries.
18 December 2008
Shamkhal Abilov
JTW |
Tuesday, 23 December 2008
Shamkhal Abilov
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