Opec issues warning on Bush oil pledge
By Carola Hoyos in Vienna and Christopher Swann in
Published: February 1 2006 22:04 | Last updated:
February 1 2006 22:04
opec logoThe Organisation of the Petroleum Exporting
Countries on Wednesday warned that President George W.
Bushs proposal to reduce US dependence on Middle
Eastern oil could badly jeopardise needed investment
in Gulf oil production and refining capacity.
Opec delegates and officials said the group planned to
make this point in its as yet unpublished commentary
in the cartels January bulletin next week.
Speaking after Mr Bushs Tuesday night State of the
Union address, Edmund Daukoru, Nigerias energy
minister and president of Opec, said: We do believe
that energy issues cannot be handled in a unilateral
way; we all have to work together towards global
Privately, Opec officials were more direct in warnings
about Mr Bushs declared intention to reduce Americas
dependence on Middle East oil by 75 per cent by 2025.
But they emphasised Opec would avoid a confrontational
tone in its commentary.
An Opec delegate said: Comments like that are
unrealistic. Everyone knows the world will continue to
depend on Middle East imports. The organisation would
raise concerns about such statements damping
investment at meetings with the European Union and
other organisations more aligned with Opecs view.
Opecs concern was shared widely across the industry.
John Felmy, chief economist of the American Petroleum
Institute, which represents the US oil and gas
industry, said: If one of your big customers tells
you they do not want to buy from you in the future,
then of course this will impact how much you invest.
The International Energy Agency, the industrialised
countries energy watchdog, forecast the Middle East
will have to invest heavily to ensure the worlds
energy thirst is satisfied.
On Wednesday Martin Bartenstein, economics minister of
Austria, which holds the EU presidency, said the
Middle East, with two-thirds of the worlds oil
reserves, would become more rather than less
He told the FT: As the person responsible for EU
energy policies, I would not see myself in a position
of talking about such a significant decrease in demand
from a certain region. We know that the oil import
dependency of the EU will ever increase, not
He added: Everyone . . . will have to deal with oil
and gas, especially from the Middle East. Worries
over the stability of Iran on Wednesday drove the oil
price up 83 cents to $68.75 a barrel in midday trading
in New York.
Opec delegates and Mr Bartenstein place responsibility
for oil price volatility mainly on consuming countries
that have failed adequately to invest in refineries
and pipelines needed to get oil to their consumers.
Mr Felmy said shifting oil imports from the Middle
East could be costly for America. As long as America
has a diversified range of oil suppliers it has a lot
of security of supply. If you reduce this
diversification it could be costly. About 20 per cent
of oil sold to the US comes from the Middle East, with
Canada and Mexico supplying more than 30 per cent of
Any decrease in the US dependence on oil from the
Middle East could only really be achieved by a
decrease in its dependence on all foreign oil either
by conservation, alternative energy or domestically
produced oil and gas, analysts said.