OPEC members restart some oil production projects

OPEC secretary-general Abdulla el-Badri told the Wall Street Journal that of those 35 OPEC oil production projects said in February to be put on hold, seven were being re-started, thanks to buoyant oil prices.

The new oil production projects would be brought on stream over the two to four years and would produce 1.2m barrels per day, he said. El-Badri, who has this year voiced caution about oil prices rising too quickly and dampening an economic recovery, sounds reasonably comfortable with the near-$80 levels seen recently. He said the oil environment was ‘becoming more healthy’ but he also voiced concerned about oil demand:

“The consumer wants security of supply….But we do need security of demand,” Mr. El-Badri said. As the WSJ notes, the idea that oil demand will in fact peak in the near future is gaining traction – in a recent Deutsche Bank report, for instance, and in recent remarks from BP’s chief economist Christof Ruhl.

There’s no doubting that many oil production projects were delayed after prices began to fall dramatically in September 2008. But getting hold of detailed data on production from some OPEC members is notoriously difficult.

The IEA in a paper for the G8 noted that OPEC had not provided details of those 35 delayed projects, and the IEA’s own data had only identified 30 OPEC projects that had been delayed, adding: “though it is unclear which of them have been deliberately stalled because of weaker demand and/or lower prices”.

Tags:  oil production, OPEC members