PARIS, April 2 - OPEC may be able to live with oil prices around $50 a barrel in 2009, its Secretary General said on Thursday, another sign the group has limited its price aspirations for now because of the weak economy.
The comments are the first indication from the Organization of the Petroleum Exporting Countries of how long it can withstand oil at $50, below the $70-$75 many in OPEC and the oil industry say is needed to encourage investment in new supply.
"We cannot really invest at current oil prices. Maybe we can live with it this year," Abdullah al-Badri told a conference in Paris. "The cost of adding new capacity is still high."
Badri added: "2009 is the most difficult year for the world to live."
While painful for producers, cheaper oil equates to a large economic stimulus for consumers and oil producers stand to benefit in that a stronger economy encourages demand for fuel, which is forecast to decline this year.
When it met in March, OPEC decided against a new output reduction to bolster prices, saying it was waiting to see the outcome of a G20 summit, which took place in London on Thursday.
World leaders agreed to $1.1 trillion in financing to strengthen the world economy and toughened up the regulations on banks, hedge funds and tax haven at their summit on Thursday.
CANNOT BE DREAMERS
The oil minister of Qatar, who is also attending the Paris conference, made similar remarks to Badri's.
"I say the current price of $50 is more pragmatic related to the world economic crisis," Abdullah al-Attiyah said. "We cannot be dreamers."
He said: "$50 a barrel is pragmatic in 2009. I am not talking about the price I want."
Oil has fallen from a record high above $147 a barrel last year as the global economic crisis has eroded demand. Crude was trading above $52, up more than 8 percent, on Thursday as rising equities and the G20 meeting bolstered sentiment.
Prices have also recovered from a low last year of $32.40 after OPEC agreed since September last year to reduce oil output by 4.2 million barrels per day, about 5 percent of daily world demand, to support prices.
So far, it has met that commitment by just under 80 percent.
The 12-member group next meets at the end of May to reassess the balance of supply and demand.
OPEC has repeatedly warned the drop in prices will hurt investment, threatening shortages and forcing up prices just when the economy and demand might be recovering.
Its members have delayed 35 projects to expand supply, Badri said in February.
At Thursday's Paris conference, Total CEO Christophe de Margerie said many oil companies were delaying big projects to preserve cash and his company might not meet its plan to invest $18 billion this year.
Other international oil companies (IOCs), such as Exxon Mobil Corp,have said they would not cut back on investments in new crude production despite the price plunge.
A former chief executive of state-owned Kuwait Petroleum Corp., Nader Sultan, said while the fall in prices brought opportunities for IOCs, that was not the case for national oil firms.
"IOCs have a strategy to expand now. For them now, there are good opportunities to buy assets because oil prices are so cheap and because they have resources," he said at the conference.
"But under the current economic circumstances, national oil companies cannot do that. They contribute so much to the governments. I hope this explains the paradox."
The comments are the first indication from the Organization of the Petroleum Exporting Countries of how long it can withstand oil at $50, below the $70-$75 many in OPEC and the oil industry say is needed to encourage investment in new supply.
"We cannot really invest at current oil prices. Maybe we can live with it this year," Abdullah al-Badri told a conference in Paris. "The cost of adding new capacity is still high."
Badri added: "2009 is the most difficult year for the world to live."
While painful for producers, cheaper oil equates to a large economic stimulus for consumers and oil producers stand to benefit in that a stronger economy encourages demand for fuel, which is forecast to decline this year.
When it met in March, OPEC decided against a new output reduction to bolster prices, saying it was waiting to see the outcome of a G20 summit, which took place in London on Thursday.
World leaders agreed to $1.1 trillion in financing to strengthen the world economy and toughened up the regulations on banks, hedge funds and tax haven at their summit on Thursday.
CANNOT BE DREAMERS
The oil minister of Qatar, who is also attending the Paris conference, made similar remarks to Badri's.
"I say the current price of $50 is more pragmatic related to the world economic crisis," Abdullah al-Attiyah said. "We cannot be dreamers."
He said: "$50 a barrel is pragmatic in 2009. I am not talking about the price I want."
Oil has fallen from a record high above $147 a barrel last year as the global economic crisis has eroded demand. Crude was trading above $52, up more than 8 percent, on Thursday as rising equities and the G20 meeting bolstered sentiment.
Prices have also recovered from a low last year of $32.40 after OPEC agreed since September last year to reduce oil output by 4.2 million barrels per day, about 5 percent of daily world demand, to support prices.
So far, it has met that commitment by just under 80 percent.
The 12-member group next meets at the end of May to reassess the balance of supply and demand.
OPEC has repeatedly warned the drop in prices will hurt investment, threatening shortages and forcing up prices just when the economy and demand might be recovering.
Its members have delayed 35 projects to expand supply, Badri said in February.
At Thursday's Paris conference, Total CEO Christophe de Margerie said many oil companies were delaying big projects to preserve cash and his company might not meet its plan to invest $18 billion this year.
Other international oil companies (IOCs), such as Exxon Mobil Corp,have said they would not cut back on investments in new crude production despite the price plunge.
A former chief executive of state-owned Kuwait Petroleum Corp., Nader Sultan, said while the fall in prices brought opportunities for IOCs, that was not the case for national oil firms.
"IOCs have a strategy to expand now. For them now, there are good opportunities to buy assets because oil prices are so cheap and because they have resources," he said at the conference.
"But under the current economic circumstances, national oil companies cannot do that. They contribute so much to the governments. I hope this explains the paradox."
