Last Updated: Tue Nov 02, 2010 12:11 pm (KSA) 09:11 am (GMT)

Saudi King donates $1.5 billion at oil summit

The Saudi king pledged one billion dollars to an OPEC fund for developing countries and 500 million dollars in soft loans to poor countries to fund energy and development projects, at the opening of a special oil summit in Jeddah on Sunday.

King Abdullah called the summit this month as the cost of a barrel of crude hurtled towards 140 dollars.

He opened the high-profile meeting by saying his country had boosted output by 200,000 barrels to 9.7 million per day -- its highest level since 1981 -- in a bid to defuse the energy crisis.

Thirty-six countries and top international institutions and 22 major oil companies attended the talks on the causes of the price surge. The United States, Germany, India, Australia and other major consumers have appealed for greater supplies to slake the world economy's thirst for oil.

Energy-for-the poor

Speaking at the opening of a meeting of world oil consumers and producers, King Abdullah also urged the creation of what he described as an international energy-for-the poor initiative and called on the World Bank to arrange a meeting to discuss it.

"I call for the launch of an energy-for-the-poor initiative, the purpose of which is to enable developing countries to face the rising cost of energy," he said.

"I also call for the ministerial council of the OPEC fund for international development to meet and look into deciding a parallel program that would be continuous in nature. I propose that this program allocates $1 billion," he added

The Saudi king also suggested the creation of a task-force to follow up any decisions made at the Jeddah meeting and monitor the global oil market.

Soft loans

King Abdullah also announced Saudi plans to provide soft loans to help poor nations deal with high oil prices but said cooperation between consumers and producers was the only way to address the effects of "rapid and unjustifiable" increases.

"I announce the allocation of $500 million for soft loans through the Saudi development fund to finance projects to help developing countries to acquire energy," he said.

"In this critical hour, the world community should rise to its responsibility and cooperation should be the cornerstone of any efforts..."

Saudi Arabia said in recent days it would raise output to 9.7 million barrels per day (bpd) in July, its highest rate in decades. King Abdullah confirmed the output.

"Although OPEC had left the market to decide the price of oil and was keen on meeting the increasing demand ... fingers were pointed against OPEC alone," he said.

Unfair blame

King Abdullah said Saudi Arabia was willing to provide oil supplies needed in future but said OPEC was being unfairly blamed for high prices spurred by speculation and taxes.

The summit hosts and other top providers are also demanding action against "speculators" whom they blame for the price rise.

"We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply," OPEC president and Algerian oil minister Chakib Khelil told a briefing.

Khelil said the 13-nation Organization of Petroleum Exporting Countries would only consider a production increase at a regular meeting in September.

"We believe speculation, in its noble and not noble terms, has its impact," the OPEC chief said.

Khelil said much of the price explosion can be explained by currency market turbulence. "A lot of people are talking about the uncertainties about the reserves. But what about the uncertainties on the dollar?"

A Saudi source said there is scope for other countries to follow his country's production increase as there are up to three million barrels of spare capacity within OPEC nations.

British Prime Minister Gordon Brown, the senior western leader at the summit, called for a "new deal" between consumers and producers. But like many Europeans at the meeting he said production shortages and speculation had to be studied.

Brown said that the world was going through "the biggest of all three oil shocks" in recent decades.

Comments »

Post Your Comment »

Social Media »