US Sec. of Energy Spencer Abraham met Aug. 24 separately with French Industry Minister Patrick Devedjian and International Energy Agency Executive Director Claude Mandil in Paris. The major topic for discussion at both meetings was the current high price of crude oil on the world market.
During their meeting, Abraham and Devedjian "agreed on the need to increase oil production capacities and to, therefore, proceed with investments to that end." They also both concurred that "renewables would be one of the answers to the threats affecting oil prices." In addition, Abraham outlined the various current research trends for renewable energy in the US.
Mandil told OGJ that both he and Abraham held a concurrent analysis of the oil situation. Current prices were considered by both men to be too high and therefore bad for the world economy. There was no apparent reason for prices to remain at the current level, as oil supply exceeds demand, Abraham and Mandil agreed.
Meanwhile, despite troubles with oil giant OAO Yukos, Russian oil exports have been reduced only by 5%, they said (see related story, this page). Also, they said that there would be other Russian producers to make up for any shortfall in output from Yukos.
Mandil noted that the main bottleneck in Russia was due to logistics, and not production problems.
Prices should continue to fall, as they had in late August, the men said. However, with spare production capacity hovering at about 1.3 million b/d of oil, there is not much leeway for dealing with any unforeseen event that might disrupt production. IEA would draw on its strategic oil stocks if any major oil sources were cut off, Mandil said.
Mandil told OGJ that Iraq's oil production is expected to be volatile at best, as exports are continuing to be interrupted by attacks on pipelines and equipment. "But Iraqis have a talent for repairing the damage very quickly," he noted.
Abraham and Mandil agreed that market signals clearly indicate that more investments are needed both in the upstream and downstream sectors.
Other measures to increase energy supply, such as energy efficiency and other efforts to encourage responsible energy consumption, should also be encouraged, they said.
