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Non-OPEC oil producers hampered in efforts to boost output
PARIS
Petroleumworld.com, May 1, 2008
Oil producers outside the OPEC cartel are unable to pump enough oil to reduce crude prices, hampered by robust domestic demand, weak investment and exhausted oil fields, analysts say.
In the short term, "no non-OPEC member is in a position to produce more," said Francis Perrin of the publication Petrole et Gaz arabes.
"They are selling all the oil they can."
The Organization of Petroleum Exporting Countries, by contrast, has reserves equivalent to about 2.0 million barrels a day, essentially in the hands of Saudi Arabia.
While the market until recently had been expecting an output hike in non-OPEC producers, analysts are now revising downward their projections in light of disappointing performances by Mexico, Russia and Brazil, said Mike Wittner of the bank Societe Generale.
While in the long-term Kazakhstan, Brazil and Canada could boost output, "it would hardly compensate for a decline" in British and Norwegian fields in the North Sea, Perrin said.
And in the United States, he added, "the development of off-shore fields in the Gulf of Mexico will not be enough to compensate for the decline of older facilities."
In some countries, a lack of investment is the problem. In Mexico, for example, the national oil group Pemex turns over all its profits to the state, depriving the company of the means to look for new sources.
In other producers, notably Kazakhstan, production has been plagued by physical difficulties, such as the great depth at which oil is found.
Kazakhstan's Kashagan field, the world's largest discovery since the end of the 1960s, should eventually produce nearly 1.5 million barrels a day. But its operational launch, repeatedly delayed, is not likely to take place before 2011.
The vast oil sands of Canada constitute the largest proven oil reserves in the world after those of Saudi Arabia. But the extraction of its extra-heavy crude poses complex technical hurdles.
While many parts of the world, such as Africa, remain untapped, prospecting costs have doubled in the last four years, discouraging oil companies -- despite healthy earnings from rising prices -- from investing there.
Perrin describes Russia, which currently produces 9.5 million barrels a day and is challenging Saudi Arabia for the number one producer ranking, as "a huge question mark."
"Investment is insufficient and it is not the most attractive place for foreign companies," he said.
"There are many areas that remain unexplored, especially in eastern Siberia, but the area is huge and difficult to exploit."
Conceded university professor Jean-Marie Chevalier, "our dependence on OPEC is going to increase even more."
Story by Veronique Dupont from AFP
AFP 01 0140 GMT 05 08Copyright© 2008 respective author or news agency. All rights reserved.
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