VIENNA, (AFP) - The spike in oil prices in recent months is stoking heated arguments between market players, who blame each other for the lack of production capacities that has been exposed by strong global demand.
At a seminar last week organized by the Organization of Petroleum Exporting Countries in Vienna, the oil world`s principal actors -- producer and consuming countries, oil companies and analysts -- discussed the contentious issue at length.
"Investment matters!", Claude Mandil, executive director of the International Energy Agency (IEA), warned Thursday.
Production investment is needed not only to boost existing capacities to meet the growing needs of emerging countries, but also to maintain current capacities by improving crude recovery techniques, Mandil said.
Refining capacities were also considered inadequate.
The IEA, which represents the Western consuming nations, repeatedly sounds the alarm over what it sees as booming demand that will span the next three decades.
For transportation and a number of other sectors, nothing can replace oil, the agency argues.
Norway`s oil minister, Thorhild Widvey, took the same tack.
The "key challenge," she said, was to respond to growth in oil demand that "is the strongest in decades."
She noted that "companies were quick to cut investment budgets in the 1980s" but were "slow to react to higher price levels."
"I think we will continue to see relatively high prices in the future," she said.
Meanwhile, oil company representatives defended their investment record.
"Of course, we are doing it, it`s our lifeblood," the chairman and chief executive of US giant Chevron, David O`Reilly, said in an interview Thursday.
But the balancing act is often tricky, because besides the clear issues of financial profitability at play, the majors face the fact that two thirds of the world`s oil reserves are found in a fistful of countries in the Middle East.
And some of them welcome foreign companies, while others stake their black gold as the exclusive preserve of their state companies.
"It is important to have the opportunity to invest more in the OPEC member countries, perhaps by means of joint ventures with local oil companies. If one wants to increase production capacity, it`s fundamental," the chairman and CEO of French group Total, Thierry Desmarest, said earlier in the week.
The IEA`s Mandil argued for wide-open market access.
"It would be good if all companies would be allowed in OPEC countries, and it is not the case," Mandil said. "Much of the world reserves is restricted, in some cases it`s totally forbidden," he said.
But the dynamic market trend could change that. OPEC has acknowledged for months that the cartel is straining at near-capacity production, rendering ineffective its traditional role of market regulator.
For Frederic Lasserre, an analyst at French bank Societe Generale, OPEC will have to open up access.
"That is going to take time but I think that in the long run it is practically the only possible way to allow OPEC to meet demand," Lasserre said.
"If it wants to increase its market share to the level which is indicated by the (demand) forecasts of today, it seems unlikely that it can do it without the participation of international oil companies, not only because of their technical know-how but also their ability to mobilize investments which will be 100 percent dedicated to increasing capacities," he said.