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OPEC Has Enough Capacity to Meet Oil Demand
Oil production facilities in a oil field

Abu Dhabi, UAE (WAM) — OPEC has enough oil output capacity to meet any unexpected rise in world demand this year, Energy Minister Mohammed bin Dhaen Al Hamili affirmed.

'"Member countries of OPEC have sufficient oil production capacity to meet any unexpected surge in demand this year as well as the immediate future. The demand on OPEC oil is expected to rise from 28.5 mb/d last year to 29.2 mb/d this year. However, OPEC countries are currently producing around 30.5 mb/d which is well beyond the required output for this year," said Al Hamili.

"'Oil supply/demand fundamentals for last year and so far this year clearly indicate oil supply has exceeded oil demand and that has led to substantial accumulation of oil stocks in most major consuming nations, he told a function on June 4 to mark the 30th anniversary of establishing the Abu Dhabi Chapter of the Society of Petroleum Engineers (SPE).

Last year, he said, the world economy grew by 5% whereas the annual average growth between the years 2001 -2003 has ranged between 2.4 - 3.8%.

World economy is expected to remain strong though some what slower than this year averaging 4% growth.

"The strong growth of world economy in 2004 led to substantial increase in oil demand, averaging around 2.5 mbd, the highest in recent years.

World oil demand has remained strong so far this year and is expected to average 1.8 mb/d.

'"Looking at the future outlook, projection of oil and gas developments clearly indicate that world energy needs will continue to rise, due to strong growth in world economy, increasing world population and improvement in the standard of living in formerly deprived regions,"' he remarked.

As a result, world oil demand is expected to increase from around 84 mb/d in 2005 to around 90 mb/d in 2010 and will rise further to 105 mb/d in 2020. That represents growth of 25% over the period 2005 - 2020.

In order to meet the growth of world oil demand in the future, he added, both OPEC and non-OPEC producers are expected to invest in upstream projects to expand their oil production capacities.

Under this scenario, he went on to say, non-OPEC supply would expand from around 51 mb/d this year to 57 mb/d by 2020, a growth of around 11 % over that period.

According to him, most of the increase in oil supply to meet future growth in world oil demand will come from OPEC member countries, particularly the rich-resources Middle Eastern region.

"To meet future world oil demand, OPEC oil production (including NGLs) will rise from 33 mb/d in 2005 to 47 mb/d by 2020, an increase of 42% over that period. As a result, OPEC world market share will rise from 40% at present to more than 45 % by 2020.

"With respect to natural gas, the growth in world demand is rising faster than that for oil. World natural gas consumption stands at around 25% of total world commercial energy consumption now, relative to 40 % for oil. The share of natural gas consumption is expected to rise in the future, reaching around 30 % by 2020.

Looking at the supply side, he added, non-OPEC production (including OPEC, NGLs), rose by 1.4 mb/d in 2004, from 5.3 mb/d in 2003 to 53.7 mb/d last year. On the other hand, OPEP crude oil output expanded by almost 2 mb/d for the same period, from 27 mb/d in 2003 to around 29 mb/d last year.

'"The growth in non-OPEC supply is expected to slow this year as compared to last year, due to declining production from some producing regions, such as the North Sea and a possible slow down in the Russian oil output.

On prices, he said : "This rapid rise in prices can be attributed to strong economic factors, but in addition, there are other factors that are not directly related to oil market fundamentals, which have influenced world oil markets.

"Instability in some oil producing regions, the role of speculators in the oil markets, severe bottlenecks in refining capacity in major consuming nations (e.g. USA), and market fears of limited spare oil production capacity have all played a role in influencing oil prices.

Sitting atop the world's fourth largest proven oil reserves and the fifth biggest proven natural gas, the UAE oil industry is witnessing major developments aimed at increasing oil production capacity to meet world rising demand for oil. In the down stream sector, major developments have taken place in recent years which have led to the expansion of refining capacity in the country.

With regard to natural gas, the UAE has major ongoing development project to expand natural gas production in order to meet the rising domestic demand as well as re-inject it into reservoires to enhance oil recovery and make additional volumes available for exports.




 

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