Defesanet 15 Agosto 2005
Cantos 15 Agosto 2005
Distribuído por Cantos.com

A. Yes, we think that currently prices have hit an all time high. Brent is trading at over $60 a barrel and we think it is going to stay at around those levels through the rest of this year. It should come off a bit in 2006, but the average for the whole year we think is going to be well over $50. So that's a very substantial upwards revision from where we were before, where we were looking for high $40s. And it's very high relative to the historic average, which for Brent has really been about $20 a barrel. So it is a very, very worrying level of energy cost, a real burden on firms in terms of the pressure they get on their margins and of course it is a potential inflationary effect, which central banks around the world are quite worried about.

Q. How important is China now as an oil user relative to the US and Japan?

A. China is now the second biggest oil consumer in the world. During the course of 2005, we think it is going to be consuming around 7m barrels a day and that is compared to the US, which is the biggest consumer at about 21m barrels a day. So very, very substantial. It consumes about the same as the big European four economies put together. So China is a very substantial drain. And of course the other worrying thing is that China not only is the second biggest consumer but it is also one of the fastest growing oil markets in the world. So not only is it consuming a lot now, but it is going to be consuming considerably more in the future because oil demand is rising by 5 or 6 per cent a year.

Q.So will it take over the US as the number one customer?

A.We're a very long way away from that because it is only about a third in terms of consumption relative to that of the US. It would take a very long time for that to happen. But of course incremental demand, in terms of how much extra weight or strain it is putting on the oil market every year, China is probably the most significant player out there. It really is a very important part of what's driving oil prices up to these record highs.

Q.Is that something of a concern to us then?

A.Well yes. I think if you look at what's going on in the oil market, up until maybe the mid 1990s India and China weren't really big drivers in terms of pushing global consumption forwards. And then when they did start to demand more oil, and it particularly China but India to is important to some extent, a lot of the additional supply was coming not from the OPEC countries but actually from Russia who was bringing a lot of oil on stream in Siberia. Now Russian production is starting to plateau and so everyone is looking around to see where the next sources of oil are going to come from. There hasn't a lot of investment in OPEC in recent years and so consequently the market is very tight. There's not a lot of spare capacity. Opec is running with practically no spare capacity at all and that means that oil markets become extremely jittery. And what we're seeing is every time there is any threat at all of a supply disruption, or any sign at all that demand is ticking up further in these key markets, prices go through the roof.

Q.So would you say that Opec has given up trying to reign in the oil prices?

A.Well given up is probably a little bit too strong. But I think in practical terms there isn't very much they can do. I mean it is certainly not possible for them to really ramp up production, flood the market with oiland drive prices down. That's not really within their grasp any more. They just don't have the capacity to do it. They're trying to drive prices down to some extent through statements. So they're making promises about how perhaps they raise production quotas going forwards if the price remains very high, or the market remains very tight. But these statements of course lack credibility in a world where everyone knows they don't have a lot of spare capacity. So they're trying, but there's not really much they can do.

Q.What are they doing to expand their capacity?

A.We are seeing increasing investment activity now going on in Opec. For the last few years oil prices were high, but oil majors were really assuming that that was temporary, that price is going to drop back. A lot of the investment is having to go into areas where the extraction costs are a little bit higher and perhaps if prices did revert to $20 they wouldn't be profitable. Now, of course, people's expectations about a long run price have changed and so we are seeing a lot more investment activity going on within Opec and also other regions of course. Africa, investment has been very, very high. Some investment in Latin America. So we are seeing this, but of course it takes quite a long time to bring stuff on stream. We will be getting more capacity on stream in Opec over the course of 2006, but a lot of the bigger projects that you read about don't really come on stream until 2007 and some of them not even until 2009. Saudi talks a very good game. They say that they have plans to raise their productive capacity by as much as 50% over the next five or six years. But a lot of that investment hasn't even been started and it wouldn't come on stream until the next decade. So in the immediate short term - the next 18 months, two years - there's not really much more coming on stream than we're going to be seeing going off stream through wells being run out, say, in the North Sea.

Q.You mentioned Saudi Arabia there. Could the death of King Fahd lead to any change in oil policy there?

A.It's quite unlikely. I mean the new king, King Abdullah, has been effectively ruling the country for the last 10 years anyway after King Fahd had a stroke. So policy changes probably not particularly likely. He has been a little bit constrained over the last decade of course because the King had still been alive and that does put some brake on his ability to make reforms. And so I would expect to see perhaps some acceleration in some of the political reforms that we've seen, but really not very much. The country is quite unstable. The terrorist threat is very high. That means it is quite difficult for anyone in the government there, in the Royal family, to move forwards without broad-based support and that takes a lot of time to put together. So I wouldn't expect to see any great policy changes.