VIENNA, June 15: Opec adopted a two-pronged plan to tackle high oil prices and supply problems on Wednesday, raising the cartel’s oil production ceiling next month and promising another increase later if prices do not fall.

But after its ministerial meeting in Vienna, the Organization of Petroleum Exporting Countries also warned consumer nations and the oil industry that they must tackle a refinery bottleneck which it blames for driving oil prices above $55 a barrel.

“The conference decided to raise the current Opec production ceiling by 500,000 barrels per day to 28m bpd, with effect from July 1, 2005,” oil and energy ministers of the 11 nation cartel said in their final statement.

The move was motivated by “expectations of strong global oil demand during the remainder of the year, in particular in the fourth quarter 2005” and “the resumption of price increases,” they added.

Opec president Sheikh Ahmed Fahd al-Sabah was also granted the power to make a second increase if necessary before the cartel’s next scheduled meeting in September, after consulting his fellow ministers, the statement added.

Saudi Arabian Oil Minister Ali al-Nuaimi, who had championed a quota hike amid fears that high oil prices are stunting economic growth, told reporters as he emerged from the meeting: “It is done”.

Opec insisted that the market was “well supplied”.

“Today there is more oil in the market than before. Our message is we are doing our homework but on the other hand we cannot solve the product problem,” Qatar’s oil minister Abdullah bin Hamad al-Attiyah said.

Oil ministers were adamant that their move to stabilize markets must be accompanied by investment in adequate refineries, which are essential to convert crude oil into products such as petrol or heating fuel.

“The conference emphasises its particular concern about the shortage of effective refining capacity to meet future strong demand growth, as a consequence of under investment in this sector, especially in conversion capacity, as well as excessive regulation,” the statement said.

It repeated call “on industry and consumer governments to urgently address this challenge, which, if left unresolved, will exacerbate oil price volatility”.

Analysts and officials have pointed out that there has been no significant investment in new refineries for about 20 years despite spiralling demand for finished petroelum products.

Sheikh Ahmed, who is also the Kuwaiti oil minister, said the refinery problem lay in “the main two consumers, China and the United States”. Ministers have also pinpointed problems in Europe and Japan.

“We send a strong message to the consumers: the problem today is not crude, it is the limitation of refineries and this we cannot solve because it is not in our hands,” Attiyah said.—AFP