WASHINGTON, March 17 (UPI) -- OPEC meets and says soaring oil prices are not due to shortage in supply. According to a statement by Qatari Deputy Premier and Energy Minister Abdullah bin Hamad al Attiya on Mar. 15 before the OPEC Ministerial Monitoring Committee meeting, the oil market is in no danger of supply shortage amid calls on OPEC to decide on increasing current quotas. Attiyah has announced that high oil prices are not due to shortage in supply. Attiyah emphasized that supply and demand were the most important issues to be discussed in the 135th Ordinary Meeting of the OPEC Conference. Attiyah noted that geo-political problems are the most important intricacies of the market, which prompt soaring prices. Although receiving mixed reactions from many member countries, Saudi Oil Minister Ali Naimi has proposed that OPEC increase output ceiling of 27 million bpd by half a million bpd. Naimi said: "We will try to convince other members to agree with our proposal in the Isfahan meeting." OPEC President Kuwaiti Oil Minister Sheikh Ahmed Fahd al Ahmed al-Sabah stressed: "If prices continue at the present rate, then we will increase our production. If necessary, we will increase by 500,000." According to Algerian Oil Minister Chakib Khelil, while OPEC could raise its production ceiling as proposed by Saudi Arabia, it would not impact prices, which were already driven higher by strong demand and other factors. Khelil said: "At the moment, the market is reacting to other factors including unbelievable economic growth in China and the U.S. ... and speculation." Khelil said that prices could fall in the second quarter but expressed concern over the continued weakness of the U.S. dollar. The OPEC Ministerial Monitoring Meeting began on Mar. 15 in Isfahan, with attending delegates from the 11 members of OPEC and included five other observing countries -- Russia, Oman, Angola, Mexico and Syria.
Ukrainian government may face libel suit over oil dealing. Ukrainian deputy director-general of the Oil Transit company and the justice minister's wife, Svitlana Zvarych, asked that Prime Minister Yuliya Tymoshenko provide evidence if the 3 million tons of oil was intended for re-export to Slovakia as part of Russian oil quotas for Ukraine. Zvarych wrote to Tymoshenko on Feb. 17: "We demand proof to confirm your public statements by presenting the text of the Ukrainian-Russian intergovernmental treaty stating that Oil Transit supplies oil to Ukrainian oil refineries, or is listed among oil companies receiving Russian oil under the quotas." Zvarych emphasized that Oil Transit retains the right to file a libel lawsuit to defend the company's business reputation and to request law-enforcement agencies to initiate criminal proceedings against Tymoshenko under Articles 364 and 365 of the Ukrainian Penal Code, which is an abuse of powers or abuse of office clause. Zvarych wrote that Tymoshenko could have received $100-120 million in profits from the deal to re-export the oil, adding, "According to our estimates, our company could earn about $3 million from the re-export deals. The profit of the state from our contract is over $20 million. We reiterate that your unlawful actions inflict losses not only on our company but also on the state, which will be forced to pay for your interference into the company's lawful foreign trade contracts." Ukraine's Cabinet of Minister banned oil re-export in the February 16 resolution, which nearly provoked the resignation of Justice Minister Roman Zvarych.
The Baku-Tbilisi-Ceyhan (BTC) oil pipeline may decrease traffic in Turkish straits. A spokesperson from the Turkish Ministry of Energy said: "Aside from its economic benefits to Turkey, the oil pipeline will help ease traffic in the Turkish straits of Bosphorus and Canakkale. We estimate that at least 333 giant tankers will be eliminated per year thanks to the (BTC) pipeline." Within the last decade, traffic in the Turkish straits has increased dramatically. The spokesperson added: "While the amount of oil carried by ships was approximately 60 million tons in 1996, this amount jumped to 143,5 million tons in 2004." Turkish energy officials have announced they expect a significant increase in the amount of oil transported from Russia through the straits. The spokesperson added: "When oil is transferred from the Caspian region to Russia and then to Turkey, the tanker traffic will likely show an increase. Each day at least 15 large oil tankers pass through the Bosphorus strait in Istanbul." Heavy vessel traffic comes from Russia, Georgia, Ukraine, Romania and Bulgaria use the straits. The Turkish official emphasized: "Every 50 minutes, a large oil carrier passes through the Turkish straits. However, the BTC oil pipeline will help bring the risk of accidents in Turkish straits to a minimum level possible. We are more interested in the safety of Turkish cities than the economic benefits the BTC may bring to us." The BTC stretches some 1,102, of which 667 miles is located in Turkey.
Increased cooperation between China and Kazakhstan assists in boosting Kazakhstan's oil production. China National Petroleum Corporation (CNPC) General Director Jiang Qi announced an increased crude oil production from Kazakhstan's Aktobemunaygaz, of which CNPC is a majority shareholder. Jiang Qi said: "It is right to search for the causes of a successful business. Last year Kazakhstan took the path of society's democratization, market economy development, rapid promotion of small and medium-sized businesses, fighting international terrorism and participation in preserving stability in the Central Asian region. It is necessary that I stress in particular (President Nursultan) Nazarbayev's will and energy. Having increased our company's profits significantly, we have proved once again that this achievement is one of the aspects of the success of Kazakh-Chinese economic relations." CNPC has invested approximately $1.3 billion since 1997 in Aktobemunaygaz. The company increased oil production grew by 670,000 tons in 2004; the volume of gas production reached a record of 2,942 million cubic yards.
China, the Philippines and Vietnam continue pragmatic cooperation in South China Sea region and engaged in "a sea of friendship and cooperation." Chinese Foreign Ministry Spokesman Liu Jianchao said on Mar. 15: "Oil companies from China, the Philippines and Vietnam signed a landmark agreement in Manila on Monday." Jianchao added that the Declaration on the Conduct of Parties in the South China Sea the three countries would undertake a $15 million joint marine seismic project in the South China Sea. During her meeting with representatives of the three companies on Mar. 14, Philippine President Gloria Macapagal-Arroyo described the project as a "historic breakthrough." According to Jianchao, China and the Philippines initiated cooperation efforts in September when the two countries an agreement to conduct a marine seismic undertaking, adding, "Vietnam signaled its strong interest in participation and finally joined the agreement through several rounds of negotiations."
Iraqi pipeline suffers another attack. Fire erupted on Mar. 15 following a bomb explosion in a pipeline that transports crude oil from the Kirkuk fields to the refinery in Baiji. Unidentified men were witnessed placing a bomb under the crude oil pipeline along the eastern side of the Tigris River. Massive amounts of oil leaked into the river and resulted in the fires. An official at the Baiji refinery said: "A bomb was planted under an oil pipeline causing huge fire, on the east side of Tigris River in Fatha area near Baiji."
Closing oil prices, Mar. 17, 3 p.m. London
Brent crude oil: $56.27
West Texas intermediate crude oil: $57.45
