January 26, 2003	Sunday	Ziqa’ad 22,1423

DAVOS, Jan 25: The president of the Organization of Petroleum Exporting Countries (Opec) said on Saturday the oil cartel could consider a cut in output when it meets in March, to counter a potential surplus in supply.

“By March we will see a three million bpd surplus... For sure if there is a surplus we will look at cutting output,” Opec President Abdullah bin Hamad al-Attiyah told AFP.

He was speaking on the margins of a meeting on security of oil supply in the light of a possible war on Iraq, on the third day of the World Economic Forum in Davos, Switzerland.

Attiyah, who is Qatar’s Minister of Energy and Industry, told the forum there was speculation that a US-led war on Iraq could take 2.5 million bpd off the market and Opec had reacted to balance demand and supply by raising production several times over past months.

But Opec customers were not short of oil.

“There is no shortage of supply,” he said. I asked (consumers) one question: ‘Do you need more oil... ?’ They answered no.

“On March 11, when Opec will meet again, I think they (Opec) will face a lot of difficulties with a huge surplus of oil.”

The possibility of an end to a lengthy oil workers’ strike in heavyweight Venezuela and the reduction in the need for heating fuel as the northern hemisphere winter drew to a close meant there could be two million bpd back on the market shortly, he said.

Attiyah said fears about security of supply — that this week pushed world oil prices beyond the Opec price band of $22-$28 a barrel to around $33 — were not always well founded.

“Security of supply will be questioned continuously, sometimes for reality and sometimes for business, sometimes for speculations on future markets. We will see many people making a lot of profits, a lot of money in the name of security of supply,” he said.

Saudi Oil Minister Ali al-Naimi told the Davos meeting Opec’s aim was to reduce the world price of crude oil to $25 a barrel.

“We will try to get it back to $25,” he said.

Naimi said the threat of a US-led war on Iraq was pushing world crude prices higher because of fears that the Gulf region would be unable to deliver, although history had always proved the contrary.

Saudi Arabia is the world’s largest oil producer and exporter and Iraq possesses the globe’s second largest proven reserves.

Naimi said there were many variables affecting the price of oil and all Opec could do was to act on those that were within its power.

“We have no control if someone decides to pick a war with someone else that is a major producer. All we can do is see if we can replace that supply,” he added.

None of the speakers on the panel was prepared to say what they thought would happen if Iraq set its oil wells on fire in the event of a US-led attack, as it did in Kuwait during the 1991 Gulf war.

“Gulf supplies are the main (world) supplies and will remain the main supplies ... just because of the reserves,” Opec president Attiyah said, pointing out that the region possessed more than 60 per cent of the world’s oil reserves and more than 50 per cent of its natural gas.

“We should be pragmatic and concentrate together on how to manage crisis,” he said, adding that Opec was cooperating with non-Opec producers including Russia, Norway and Angola and with consumers.

Naimi said Saudi Arabia had 3.0 to 3.5 million bpd of spare capacity it could put on the market if necessary.

And Mikhail Khodorkovsky, chief executive of Russian oil giant Yukos, said Russia could raise output from five to seven million bpd over the next few years but it was unrealistic to extend production beyond that level.—AFP