BP economist says OPEC strategy helping to keep oil prices stable during times of crisis

BP's Middle East economist Andrew Barton said the existence of available spare capacity is a deliberate policy by Saudi Arabia and some other OPEC members and that the OPEC production response worked "according to plan." Emergency stocks in consuming countries - which are a substantial 1,280 million barrels - were not even touched, although their very existence may have also been a calming influence.

Basing his presentation on the authoritative BP Statistical Review of World Energy 2003, the economist said this spare capacity has helped to stabilise prices.

Turning to global issues, Barton said that the growth in energy demand was notably slower now compared to the 1990s, largely because of improved efficiencies, a slowing of Asian economies and growing environmental concerns.

He said environmental concerns also play a part in the growth of demand for gas, which will continue to be the fastest growing major source of energy in the foreseeable future. Renewable energy, such as solar and wind turbine power, are growing rapidly but are very small in relation to total energy demand.

Barton said that the increased consumption of oil over the past three years has been more than equalled by the growth in Russian production.

Russia was still the world's largest oil producer as recently as 1991 when it pumped 11.5 Mb/d. But by 1996 this had slumped 47% to a mere 6.1 Mb/d. Since then, however, production has grown back to 7.7 Mb/d, an increase of 25% over the last three years. Operating efficiency of the privatised Russian oil companies has improved greatly as Western technology and partnerships have been established, such as the one between BP and TNK.

Production is also growing in the Caspian region, the deep waters of the Atlantic Basin and Canada, which between them are now producing 8.2 Mb/d, up 1.3 Mb/d over the last 2 years and 2.7 Mb/d since 1997. Looking forward, this situation is likely to persist for the next few years, the economist said.