Organization of Petroleum Exporting Countries members are planning to spend $160 billion over the next four years to boost oil production capacity by 5 million barrels a day, which will enable the group to meet oil export demands despite surging internal consumption, the group's secretary general said in an interview Tuesday.
"We are investing to increase capacity. Right now, we have 120 projects worth $160 billion just to increase capacity by 5 million to 2012," OPEC Secretary General Abdalla Salem el-Badri told Dow Jones Newswires.
The growth in OPEC oil export levels in recent years has remained flat even as global oil demand growth has surged, including within OPEC's own members. That has prompted fears among some consumers that OPEC countries' growing appetite for oil at home could increasingly eat into their export capacity in the future.
"Most of the consumers know this and are making investments to cover that," el-Badri said.
El-Badri also said that OPEC countries plan to invest about $50 billion to boost refining capacity by about 3 million barrels a day.
Speaking at a subsequent press briefing, el-Badri indicated some projects planned for the 2012 target could also slip "maybe one year" due to delays caused by cost escalation and equipment shortages that have plagued the industry.
El-Badri said there has been a 50%-60% rise in the cost of oil projects in the past two to three years. "This oil price is not really a bonanza," he said.
The group has previously estimated that capacity will have to be increased by 9 million barrels a day by 2020 at a cost of $500 billion, but el-Badri said that longer-term plan would depend on how demand fares.
Producers need to be sure their future output will find buyers.
"It is a two way street: security of supply, security of demand," he said.
El-Badri was speaking on the sidelines of a conference in the Italian capital bringing together the world's major oil producing and consuming nations, as well as their top oil companies.
While the International Energy Forum has been touted as the principal gathering for dialogue between producers and consumers, there have been signs that the dialogue may be wearing thin: major U.S. oil companies like Chevron Corp. (CVX), Exxon Mobil Corp. (XOM) and others have shunned this year's meeting, while the two camps remain sharply divided over the reasons for the rise in benchmark U.S. crude oil prices, which hit a new record Tuesday of $118.05 a barrel.
"I'm very surprised that major oil companies from the United States did not appear at the conference," el-Badri said.
"I don't know why there are people or countries or companies that are hiding from dialogue. If they have any complaint, they should come and explain their point of view," he said.
On Venezuela's proposal that OPEC members review the way in which they measure oil production, el-Badri said he was open to new ideas.
Venezuela's official production figures have long been out of sync with outside estimates. Venezuela says it produces about 3.3 million barrels a day at present, while secondary sources cited by OPEC put it about 2.3 million barrels a day.
"They would like to find another way to measure production. For us, we will see what kind of method they are suggesting," said el-Badri, who plans to visit Venezuela in May.
OPEC currently uses production figures provided directly by member governments, as well as an average of five secondary sources, he said.
Any official change to that procedure would have to be approved by all OPEC members, he said.
"To measure production by (any other way) than direct communication, any other instrument to do it, is up to the conference to decide," he said.
OPEC is next scheduled to meet for an official policy meeting in September.
Asked if there was any possibility it would decide to meet before then, el-Badri said, "As of now, OPEC will meet as agreed in September."