OPEC Delays 35 Oil Projects to Boost Prices

The declining oil prices, owing to the financial crisis which erodes world demand for crude oil, has forced the Organisation of Petroleum Expor-ting Countries (OPEC) to delay 35 oil projects till after 2013.
OPEC's Secretary-General, Mr. Abdalla El-Badri, disclosed at a Chatham House energy conference, weekend that the group's revenue had been adversely affected by oil's record plunge, a development which he said prompted member countries to set back 35 of the 150 projects due to come on stream in the next few years to expand supply.
El-Badri had in a report published in OPEC website stated that the falling prices of crude oil will not only affect investments in both the upstream and downstream sector, but would delay future investments. He raised fears that if the present situation does not change, it will lead to cancellation of future investments and automatically affect oil supply to the market.

"If the present situation does not change and we do not return to reasonable prices for oil products, the likely effects will be far-reaching. Very low prices will affect investments in both the upstream and downstream. This will have two main consequences. First, it will delay future investments in the sector, and second, it may also lead to the cancellation of further future investments. "Either way, this will automatically affect oil supply to the market. In addition, it will also have an effect on gas supply," he said.

OPEC which pumps a third of the world's oil earned close to $1-trillion last year, according to the U. S. Energy Information Administration.
But El-Badri confirmed that the group's income this year would be cut by 50 per cent. "The decline ‘cost’ OPEC US$356-billion in income in the period from the peak in prices to last month,” he said, adding that the startup dates of many other projects are still expected to slip.

The OPEC scribe said declining oil demand worldwide had prompted OPEC to reduce output by 4.2 million barrels per day (bpd) since September to prop up prices, boosting its unused production capacity to about eight million bpd.
Despite the gloom, OPEC has attempted to stay ahead of the slowdown in demand, by removing 4.2 million bpd of production from the market, about five per cent of daily world demand.
El-Badri said early indications are that members have delivered on 80 per cent of that pact, higher than some estimates. Another 900,000 bpd had to go to ensure perfect compliance, he added.
Oil has fallen to $40 a barrel from a record high of $147 in July 2008 as a deepening recession erodes demand for fuel. To help revive prices, OPEC said it is willing to cut yet more oil output at a meeting in March.

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