DOHA: The oil market is slowly recovering from its steep drop over the past two years but crude is still not trading at a “fair price” to encourage necessary investment, Qatar’s Energy and Industry Minister Mohammed bin Saleh Al-Sada said Tuesday, ahead of next week’s meeting of OPEC producers.
The minister said a minimum price of $65 a barrel is “badly needed at the moment.”
Al-Sada said Qatar’s economy remains healthy even at current oil prices and that major infrastructure projects are on track. That includes preparations for the 2022 World Cup, which will require billions of dollars’ worth of additional stadiums, transport links and hotels — some of which are now being raised just outside Al-Sada’s office — to be built over the next eight years.
“Everything is on schedule,” he said.
He cautioned that the security of future supplies is at risk because of the price slump that has squeezed oil producers since 2014.
“The oil market is recovering slowly but steadily. Luckily, the fundamentals show it is heading in the right direction,” Al-Sada said.
“I don’t think we are yet at a fair price. We need to have a fairer price so that we can have the ability to invest more in order to secure the energy supply to the world and avoid any price shock.”
In the interview, Al-Sada did not rule out reviving talks of a freeze in production among major producers after similar negotiations collapsed in Doha last month.
He currently serves as president of the 13-memeber OPEC.
“Nothing actually is canceled but we are reacting to the parameters of the market,” he said.
“If OPEC and non-OPEC major producers think that the revival of it is necessary, it’s all open and on the table all the time.”
The idea for a production freeze grew out of meeting between Russia and OPEC members Saudi Arabia, Venezuela and Qatar in February as they attempted to stem a slide that at the time had pushed prices to around $30 a barrel from over $100 in the summer of 2014.
Other major producers gathered in Qatar to discuss the proposal last month but failed to agree on a cap.
Al-Sada said the April meeting was productive because it gave producers a chance to discuss “new market fundamentals.”
Even without an output freeze, prices have been clawing their way back, settling Monday above $48 a barrel. That’s still less than half their level less than two years ago.
Qatar and other OPEC member states will gather in Vienna next week to discuss what to do next.
Venezuela has suggested that non-OPEC producers might also take part in the June meeting. Al-Sada did not rule that out.
“We are in the consultation about it, whether it is appropriate to have it in the meeting, parallel to the meeting, or after the meeting,” he said.
Qatar is able to manage some of the volatility of the energy markets better than other producers because it is also the world’s largest supplier of liquefied natural gas.
But competition is coming. Australia is on track to overtake Qatar within the next two years, .
Al-Sada says the LNG competition is manageable, particularly because of Qatar’s relatively low production costs.
“We are enjoying first-mover advantage,” he said. “We know that it is just impossible that we remain alone in the market.”
Qatar economy remains healthy
Qatar economy remains healthy
