Output glut may weigh on costly investment: Attiyah

Oil producers are becoming concerned that a glut of new production capacity could depress prices and undermine costly investments in new fields, Qatar’s Second Deputy Premier and Energy and Industry Minister HE Abdullah bin Hamad al-Attiyah said.
More than 2mn bpd of unused production capacity can be tapped to replace supplies lost by a hurricane or political disturbances, al-Attiyah said at a press conference in Washington on Thursday. Producers are cautiously adding more even as the cost of building new capacity has almost tripled in the past three years.
Officials in consuming nations including US Energy Secretary Samuel Bodman say a lack of spare capacity is to blame for record high prices.
Oil prices in New York have averaged $66.74 a barrel this year, more than triple the average in the 1990’s.
“Consumers would like to see more oil there but they will not guarantee that they will use it,” al-Attiyah said. “Most oil producers are developing countries and to take a dollar from the mouth of their people and invest it in new capacity, and this capacity then will act negatively, this will be a bad investment. We have to be very careful.”

Gulf Times