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Oil world gathers amid blame game over record prices

MADRID: Leading figures in the oil world gathered in Madrid on Monday for one of the industry’s biggest events, with the search for a remedy to record crude prices again stymied by division about the causes.

A week after failing to deflate the price of crude at a summit in Saudi Arabia, the world’s biggest oil producers and consumers will get another chance during talks here to explore ways of calming tense global energy markets.

Pressure mounted Monday for a reponse to ease the pain of consumers suffering from high fuel costs and a general increase in the cost of living as crude prices breached 143 dollars a barrel for the first time. One of the main points of contention is the role of speculators, blamed consistently by producer countries for the doubling of crude prices over the last 12 months. Western oil chiefs, backing the view of governments in consumer countries, insisted on Monday that speculators were the wrong target and that the failure of supply to match rising demand was the real cause.

“This is a fundamental thing. It’s not about speculation,” the chief executive of British oil group BP, Tony Hayward, told delegates at the World Petroleum Congress, adding that it was a “myth” that speculators were to blame. “Investors is a better word than speculators. They are investing in the oil market because they believe prices will go up.”

Jeroen van der Veer, head of British-Dutch oil group Shell, also said blaming speculators was wrong, adding that the role of the market was “the translation of things that might happen in the future into the price.”

More than 3,000 delegates, including leading corporate and political figures, are attending the four-day World Petroleum Congress, which runs from Monday to Thursday after an official opening reception on Sunday. “There’s probably no better time for the WPC to be meeting,” said Hayward. The president of the Organization of Petroleum Exporting Countries, the head of the International Energy Agency and ministers from Nigeria, Russia, Venezuela, India, France and the Netherlands are expected to be present.

Saudi Arabia held a hastily arranged meeting of consumers and producers in Jeddah eight days ago to tackle the problem of record oil prices, which were forecast by OPEC’s president last week to touch $150-170 per barrel in the coming months.Most experts agreed afterwards that the only concrete result from the summit was Saudi Arabia’s announcement that it would increase daily production by more than 200,000 barrels to 9.7 million. The gathering pitted consumer nations, which are calling for an increase in production, against producers.

Most OPEC members remain firmly against any increase in their production and blame speculators and the fall in the dollar for the remarkable run up in prices, which have doubled in the last 12 months.

Western oil bosses are keen to pin the blame for high oil prices on a lack of supply. They are excluded from many countries by governments anxious to see their national oil companies retain a monopoly on oil and gas production.

The conference here offers leading world energy policymakers and company chiefs the opportunity to explore the challenges facing the industry, from environmental pressures to the search for new supplies. Environmental policy is set to take centre stage, with the industry keen to stress the opportunities presented by the need to reduce carbon dioxide emissions while stressing the long-term need for fossil fuels.

Excitement is growing about a new and underdeveloped technology called carbon capture and storage that would enable carbon dioxide to be extracted from emissions and then buried underground. Experts also stress the abundance of untapped reserves in undeveloped areas of the world such as the Arctic and the US part of the Gulf of Mexico, which will be difficult to access but potentially giant in scale. “It will surely be difficult to find, difficult to access and difficult to take to market,” said Roberto Skinner, senior vice-president of business development at StatoilHydro Canada, the Canadian unit of Norwegian oil group Statoil. afp

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