Second opening address to the 138th (Extraordinary) Meeting of the OPEC Conference

No 22/2005
Kuwait City, Kuwait
12 Dec 2005

by HE Sheikh Ahmad Fahad Al-Ahmad Al-Sabah, President of the Conference and Minister of Energy for Kuwait

Excellencies, distinguished delegates, ladies and gentlemen of the press, I would like to once again welcome you all to Kuwait city, for the 138th Extraordinary Meeting of the OPEC Conference. It is a great honour for the State of Kuwait to once again host the OPEC Conference, after nearly 40 years. I hope that you will find every moment of your stay in Kuwait very memorable.

Before turning to our business today, allow me, on behalf of the OPEC Conference, to convey our sincere congratulations to HE Seyed Kazem Vaziri Hamaneh, on his appointment today as Minister of Petroleum of the Islamic Republic of Iran, and wish him a successful tenure of office.

As I mentioned earlier during the opening ceremony, today's Meeting will review current market developments and the outlook for 2006. You will recall that in our meeting last September we decided to make available to the market our spare capacity of around 2 million barrels/day, should this be required, for a period of three months, starting 1 October. That decision was taken to reassure the market when oil prices were at record levels, shortly after Hurricanes Katrina and Rita, even though the market was well supplied.

As a result of OPEC's measures, the market is now more stable, with prices down by around 20 per cent, the OPEC Reference Basket price dipping below US $50/barrel. Although prices have started rising again, this development is normal, and is due to the cold spell in the Northern Hemisphere and the expectation of a colder-than-usual winter season.

Excellencies, as you know, OPEC Countries have been accelerating investment, expanding their production capacity to meet rising demand and build comfortable spare capacity, which is expected to reach around 2.5 mb/d by the end of 2005. This spare capacity can be made available at short notice, should the market require it, as we demonstrated in September. OPEC will add another 1 mb/d of capacity in 2006. Non-OPEC supply and OPEC natural gas liquids (NGLs) are also expected to grow, adding about 1.6 mb/d next year. By 2010, OPEC's cumulative total crude production capacity will exceed 38 mb/d. Furthermore, to reassure the market about OPEC's future production capacity, and ensure confidence through increased market transparency, the Organization has begun publishing information about Member Countries’ upstream and downstream capacity-expansion plans and investments on its website.

In the downstream sector, the situation is different. The products market remains under pressure from tightness in refining in major consuming regions. This needs attention from consuming countries so as to create an enabling environment and investment incentives. While the downstream sector remains mainly the responsibility of consuming countries, many OPEC Members are making investments to build additional refineries, both at home and abroad, in the overall interests of the industry.

Within our constructive dialogue and cooperation with non-OPEC oil-producing countries, I am pleased to welcome distinguished Heads of Delegation from Egypt, Oman, Sudan and Syria. Their presence here today underlines the importance their Governments continue to attach to our dialogue.

Excellencies, ladies and gentlemen, as I come close to completing my term of office as OPEC President and Secretary General, may I recall that this has been a challenging year for the international oil market; but once again the Organization has addressed the challenges successfully, and was able to ensure that the world oil market remained well supplied with the crude oil so vital to the global economy. I am confident that OPEC will continue to successfully meet future challenges, with support from all stakeholders in the global oil industry. Consumers can rest assured of steady, secure and economic supply for decades to come.

Thank you for your attention.