Jan. 31 (Bloomberg) -- Abdalla el-Badri, secretary general of the Organization of Petroleum Exporting Countries, comments on the global oil market and OPEC investment plans. He spoke at a Chatham House event in London today. The comments are transcribed from a recording of his speech on Bloomberg.
On the global oil market:
“The oil market currently has more than enough oil to meet current demand. Global inventories are high. Forward cover is close to 60 days which means it’s six to seven days above the five-year average.”
“OPEC has consistently said in recent times that prices are disconnected from the physical oil market and are increasingly subject to the paper market. Consequently the market is dominated by financial players, which is misleading when it comes to understanding the behavior of the oil market.”
On OPEC production:
“Our member countries are producing 29.3 million barrels a day and also collectively hold spare capacity of over 6 million barrels a day. Consequently we don’t see any shortage of oil in the market.”
On exploration and production investment:
“In the medium term we are investing an estimated $155 billion in projects across our member countries. The timetable for these projects to come on-stream is between 2010 and 2014. These projects will add around 12 million barrels a day of gross production capacity.”
On downstream investment:
“Some of our member countries are also investing in downstream projects. These projects both at home and abroad are estimated at close to $40 billion.” Refining and processing are so-called downstream activities in the oil industry.
On natural gas investment:
“The capital investment requirement for the gas industry seems to have recovered from contraction since the recent financial crisis. Actual natural gas investment in expanding capacity, production and transportation will amount to about $167 billion to 2015 across the Middle East and North Africa. The majority of this investment will be in OPEC member countries.”
“In addition, close to 39 trillion cubic meters of gas reserves remain as yet to be discovered in the Mena countries.”
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