- The Washington Times - Sunday, October 30, 2005

RIMINI, Italy (AP) — A top OPEC official said yesterday that oil companies with surging third-quarter profits should use the money to increase their refining capacity and help ease pressure on oil prices.

“This is a chance for them to invest,” said Adnan Shihab-Eldin, acting secretary-general of the Organization of Petroleum Exporting Countries (OPEC). “We believe that they should definitely make an effort to invest in the downstream in trying to resolve the bottlenecks” caused by rapidly expanding demand, Mr. Shihab-Eldin said during a conference on long-term issues of energy supply.

Several major oil companies reported third-quarter profits last week.

“We’ve been saying this past year that refining has to increase,” Mr. Shihab-Eldin said. “There needs to be more refining and upgrading.”

Concerns about refining capacity, heightened by the devastation wrought in the United States by hurricanes Katrina and Rita, have kept the price of oil above $60 a barrel.

Libyan Energy Minister Fathi Hamed Ben Shatwan said OPEC has been criticized unfairly as oil prices have surged, and that international companies should spend more in downstream activities such as refining, where profit margins are lower.

“OPEC is responsible for securing the market for crude oil only. But refineries are not their responsibility; it’s an international responsibility,” he said. “[OPEC countries] have been unfairly criticized.”

Oil prices have pulled back from highs of more than $70 a barrel in late August, though concerns remain about the pace of recovery and whether supplies will be adequate going into the Northern Hemisphere winter, when demand for heating oil peaks.

Asked about the long-term global demand for oil surpassing production as reserves diminish, Mr. Shihab-Eldin said that was a distant prospect.

“I think it’s decades away — at least three or four decades,” he said.

Mr. Shihab-Eldin said OPEC had raised capacity and production in the past to meet rising demand, and would continue to do so in the future.

OPEC is aiming to increase crude oil production by 5 million barrels a day to around 38 million barrels by 2010, and expand output of liquefied natural gas by 1.5 million barrels, Mr. Shihab-Eldin said.

Added to an expected increased production of 5 million barrels by non-OPEC countries over the same period, “much more than the demand will grow over the period.”

In his speech to the conference, Paolo Scaroni, chief executive of Italian oil and gas giant Eni SpA, urged European countries to spend on infrastructure for liquefied natural gas and avoid repeating the lack of investment in the oil sector when oil prices dropped in the 1980s and 1990s.

“Inadequate investments have brought us to the current oil crisis. We must learn this lesson,” he said.

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