Oil cartel OPEC's key producer Qatar on Wednesday made a strong case for $70 a barrel price of crude to attract investments in capacity creation for meeting future energy demands.
International crude prices, which rose to a historic high of over $147 a barrel in July last year, have slumped to four-year low of around $37 per barrel, prompting fears that companies may not invest in new fields.
"I am against very high oil prices and (I) also do not appreciate low oil prices. Low oil prices result in freeze in investments in creating new resources," Qatari oil minister Abdullah bin Hamad al-Attiyah told PTI in an interview here.
Several oil companies have put on hold investments in small and marginal fields and in difficult and frontier areas following the sharp dip in prices as current rates give a negative rate of return on the huge investments required.
"$70 a barrel price will give companies and oil producers incentive to invest more. (Prices) below that are a matter of concern," he said. "Low oil prices result in freeze in investment in new resources and when growth comes back, we will have another oil shock because there will be not enough resources to meet the demand."
He, however, strongly disfavoured the idea of crude prices going above $100 per barrel which impact economic growth worldwide. The Qatari Oil Minister said he expected crude oil prices to remain weak for the rest of the 2009 calendar year due to the global economic crisis and recession in major economies.
"But I am pragmatic. This is a cycle and oil prices will move up," he said. There is no shortage of supplies in the market but there is no demand for oil because of world economic crisis.
The slowdown in demand had forced OPEC, which supplies more than 40 per cent of the worlds oil, to slash production by 9 per cent to revive prices. Qatar, he said, was producing 7,35,000 barrels per day and had a spare capacity of 9,00,000 bpd.
He said the Organisation of Petroleum Exporting Countries does not need to cut output again so far and no emergency meeting is planned before the cartel to meet in Vienna on March 15.
He said 2009 would be a very difficult year.
What we are witnessing is the worst economic crisis of modern history, he said hoping 2010 would see revival of economies and demand for oil picking up.
