IEA urges Opec to pump more, says stockpiles tight

Jan 25 | Updated: Jan 26 2008, 06:01am hrs
Opec should pump more oil to replenish inventories and ease high prices, while state-owned oil companies must keep up the pace of investment in new capacity, the head of the International Energy Agency said.

Oil stockpiles are still very tight, IEA executive director Nobuo Tanaka said on Friday in Davos, Switzerland, where he is attending the World Economic Forum. The price level is quite high, so we want Opec to see the current situation and get the market signals right. But we cannot order them to produce more.

Oil ministers Qatar and Iraq said on Thursday in Davos that theres no need for the Organization of Petroleum Exporting Countries to increase production at a February 1 meeting in Vienna. The Paris-based IEA is a policy adviser to 27 consuming nations, including the US, Japan, and most of Europe, and was set up in the 1970s to counter the influence of the Opec.

The rising power of state-owned companies within the oil industry is a concern for the IEA, because theres less certainty those companies will invest profits in boosting capacity, and may use oil as a political weapon.

The problem of the so-called resource nationalism is that national oil companies are getting revenues, sales from very high prices, but governments try to use this for something else and that prevents oil companies investing in the upstream, downstream capacity and creates the shortage of production capacity -- and that bothers us, Tanaka said.

A lack of investment could spur an oil supply crunch by 2010, 2012, some time like that, Tanaka said. In its annual World Energy Outlook report in November, the IEA said a supply crunch in the period to 2015 cannot be ruled out.

The best way to tackle climate change is to improve energy efficiency, Tanaka said.

Bloomberg