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Opec issues warning on Bush oil pledge

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  • Greg Cannon
    http://news.ft.com/cms/s/8d5c9580-9368-11da-a978-0000779e2340.html Opec issues warning on Bush oil pledge By Carola Hoyos in Vienna and Christopher Swann in
    Message 1 of 1 , Feb 1, 2006
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      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.
      Bush’s 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      make this point in its as yet unpublished commentary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 cartel’s January bulletin next week.

      Speaking after Mr Bush’s Tuesday night State of the
      Union address, Edmund Daukoru, Nigeria’s 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
      energy security.”

      Privately, Opec officials were more direct in warnings
      about Mr Bush’s declared intention to reduce America’s
      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 Opec’s view”.

      Opec’s 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 world’s
      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 world’s 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.
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