OPEC to study U.S. shale boom

OPEC has formed a committee to examine the impact of U.S. shale oil, an admission that the burgeoning supply is worrying some of its members.

 “It is a concern,” Nigeria’s Petroleum Minister Diezani Alison-Madueke said after the Organization of Petroleum Exporting Countries decided to keep its production target unchanged at a meeting in Vienna Friday. The committee will consider the effect of shale oil on the global market for OPEC crude “in the not too distant future,” she said.

 U.S. mastery of hydraulic fracturing and horizontal drilling techniques has led to a slump in energy imports from some OPEC nations, most notably those in Africa, which typically produce lighter grades of oil similar to the North American grades. U.S. crude production jumped 20 percent in a year to 7.37 million barrels a day in the week ended May 3, the highest level since February 1992, U.S. Energy Information Administration data show.

 U.S. imports from Angola declined to 85,000 barrels a day in March, the lowest level since 1993, according to EIA data published yesterday. Shipments from Nigeria slid to 194,000 barrels in February, at least a 19-year low.

 Growing competition from the U.S. means Africa should begin to “look inwards as well to create alternate markets within the continent,”Alison-Madueke said today. “Asia has always been an alternate market. Asia will still have growing energy needs for quite a while to come, but remember that China itself may be discovering shale gas pretty soon.”

 Middle Eastern OPEC members, including Libya, Algeria and Iran, said today they have no concerns that shale supply will sap demand for their crude, while Saudi Arabian Oil Minister Ali Al-Naimi said this is just the latest in a series of new sources that the market has absorbed, such as the North Sea, Brazil and Russia.

 Five months ago, after OPEC’s mid-December meeting, Secretary-General Abdalla el-Badri fended off questions about U.S. shale, saying: “We’re not really concerned. I don’t see that big a quantity.”

 Now, he’s taking a more measured approach.

 “We are studying it very carefully, how much this will affect OPEC supply,” el-Badri said today. “Maybe the Americans will increase by 1 million and somebody else will decrease by 1 million, so we have to know at the end of the day the non-OPEC supply; it’s not only the American supply. We get different numbers about shale oil, we are trying to get more accurate information.”