[Ccarc] OPEC on Bio-fuels...ie ethanol and bio-diesel

[Tom Murray]

Saw this on-line...interesting reading....  Tom  KB9WSL

Opec warns drive for bio-fuels could lead to soaring oil prices

Published: Thursday, 7 June, 2007, 02:01 AM Doha Time

LONDON: Opec has warned that the drive for environment-friendly bio-fuel 
risked pushing oil prices “through the roof,” the Financial Times reported 
yesterday.
Opec Secretary-General Abdalla Salem el-Badri told the business daily that 
the development of bio-fuels had made the powerful group consider cutting 
investment in new oil production.
“If we are unable to see a security of demand... we may revisit investment 
in the long term,” the newspaper quoted him as saying.
The FT said El-Badri also warned that bio-fuel output could become 
unsustainable because it competed with food production.
He added that crude oil prices could go “through the roof” if investment in 
bio-fuels backfired.
The 12-nation Opec pumps more than a third of global crude supplies.
El-Badri also said Opec members could rethink their capacity expansion plans 
beyond 2012, unless dialog with consuming countries gives them assurances 
over future demand.
He said there was little enthusiasm among Opec members to spend billions on 
idle oil capacity.
Reiterating Opec’s commitment to supply the world with the oil it needs, 
el-Badri said its members had already earmarked $130bn-worth of capacity 
expansions that would add a net 6.7mn barrels a day to current production 
levels by 2012.
But a further 9mn barrels a day of capacity in place by 2020, costing 
anywhere between $250bn and $500bn, could be in doubt because “we don’t see 
the situation after 2012,” he said.
“There’s not much dedication to have excess capacity that will be idle,” he 
said, “and the money we might invest can be used somewhere else.”
Some in the group, he added, “have problems in education, in housing, in 
health.
“Opec now may revisit those investments,” after 2012 but, with reference to 
its plans until then, “we’re going to do it,” el-Badri said, adding it 
remains “committed to supplying the world with enough oil now and in the 
future.”
A clearer picture of demand would come from dialogue with the likes of the 
International Energy Agency and the European Union, he said.
In April, Opec said in its monthly magazine that trends in the US and Europe 
toward the use of more renewable fuels such as ethanol in road transport had 
prompted discussions within the group.
The magazine article went on to say: “It would, in fact, make no sense for 
them to spend money unnecessarily on building or improving facilities when 
their customers are telling them they intend to minimise dependence on Opec 
supplies.”
Omar Ibrahim, an Opec spokesman, warned consuming countries’ “words and 
actions” about future oil use were sending the wrong message to Opec 
members.
“The signals they are sending about using less oil are not helping members 
confidence about making future investments,” he said.
Elsewhere, the secretary-general said he hadn’t seen evidence of production 
rebounding by the 10 members of the group with production quotas.
The 10 formally agreed on paper to cut output by more than 6%, or 1.7mn 
barrels a day, in two tranches starting November 1, 2006.
But in recent months output has ticked higher again, according to industry 
estimates, with a Dow Jones Newswires Survey published on Monday showing 
output since February has climbed a little under 1%, or 225,000bpd, to some 
26.8mn bpd.
“I’ve no reports that member countries’ production is climbing,” el-Badri 
said. “In three-five days I will see the reports as far as May is concerned 
but we haven’t any information that some countries aren’t abiding by their 
production (targets).”
Separately, el-Badri said new Opec member Angola would certainly have an 
output quota assigned this year or early 2008, an opinion that contrasts 
with that of oil officials from the southern African nation. –  Agencies

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