OPEC Says It May Raise Oil Output at December Meeting

Oct. 22 (Bloomberg) -- The Organization of Petroleum Exporting Countries, supplier of 40 percent of the world’s oil, may decide to increase production at its meeting in December, the group’s Secretary-General Abdalla El-Badri said.

An increase will depend on whether prices remain at $75 to $80 a barrel, stockpiles return to the five-year average and floating inventories disappear, El-Badri said today in London.

OPEC will meet Dec. 22 in Luanda, Angola, to review its production quota system. Crude futures have rallied 80 percent this year, trading at around $80 a barrel today in New York as the group implements its biggest supply reduction.

“We are in a very comfortable zone at this time,” El- Badri told reporters. “If this price will continue, if we see stocks go back to the normal level, if we see there is a real economic growth, then I’m sure our member countries will increase the production.”

This year’s gain in prices has enabled OPEC to resume seven postponed projects that will provide 1.2 million barrels a day of additional capacity, El-Badri said. These are among 35 projects that OPEC had delayed until after 2013. If current prices persist, all 35 projects may be restored, he said.

Kuwaiti Oil Minister Sheikh Ahmad al-Sabah said on Oct. 6 that OPEC is unlikely to change output targets at the December gathering and that it is “impossible” for the organization to raise production this year. Saudi Arabia, the group’s biggest member and de facto leader, has yet to express an opinion.

Bound by Quotas

The 11 OPEC members bound by production quotas agreed last December to a collective limit of 24.845 million barrels day from the start of this year. The limit came after oil prices sank 70 percent from their July 2008 peak. The compliance rate with that target has slipped to about 64 percent, El-Badri said.

Angola, Nigeria and Venezuela are talking to other members about having their allocations increased, El-Badri said.

OPEC has invited Russia, the largest oil producer outside the group, to the December conference and may also invite Bahrain and former member Indonesia, El-Badri said.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.