The organisation of Petroleum Exporting Countries $254bn upstream expansion plan to raise production capacity risks being delayed if oil prices drop below $50 a barrel, the cartel�s Secretary-General has warned.
�My concern now is the price, because we are undertaking a lot of investment. If we don�t have a reasonable price then that investment will not be finished,� Abdalla el-Badri told the Middle East Economic Survey in an interview appearing on Monday (today).
Asked what price capacity expansion was relying on, he said: �It�s about $50 a barrel for the OPEC basket.�
The price of the OPEC basket, comprising 11 crudes, is currently hovering at around $58 a barrel, but it dipped slightly below $50 last month when world oil prices dived.
OPEC plans to invest $130bn in upstream expansion by 2010 and a further $124bn in the five years after that to sustain its buffer of spare capacity, Badri said.
He said that while each member country worked with different price floor assumptions, the cost of construction, drilling, field operations, well workovers and other oil services was still rising fast.
�If (oil) prices go down and if costs go up then, in the future people will think twice before they undertake any project. So, maybe instead of finishing them in two or three years, they will finish them in five or six years,� Badri said.