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Mon 31 Oct 2011 04:40 PM

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UAE cites $80-$100 as ‘reasonable’ oil price

Mohammed bin Dhaen al-Hamli says producers can tolerate a further slide in barrel price

UAE cites $80-$100 as ‘reasonable’ oil price
UAE Oil Minister Mohammed bin Dhaen al-Hamli

Oil
producers can tolerate a further fall in oil prices to $80-$100 a barrel, the
oil minister for the United Arab Emirates said on Monday, the first indication
of a preferred price range from a Gulf Arab producer since OPEC talks collapsed
in June.

"For
us it is very important to see a reasonable price...to us a price that is
around $80-$100, that is reasonable," said UAE Oil Minister Mohammed bin
Dhaen al-Hamli.

"We
need a reasonable price to continue building capacity," Hamli told the
Singapore International Energy Week conference.

The UAE
is one of the trio of Gulf OPEC producers alongside leading producer Saudi
Arabia and Kuwait which work closely together on output policy. The three
control nearly all the world's spare capacity and raised oil supplies this year
to compensate for lost Libyan production.

Brent
crude on Monday was valued at just over $109 a barrel, having fallen from about
$118 when OPEC met in June, leaving plenty of room to fall further to get into
the UAE's preferred price range.

June
OPEC talks broke down in acrimony when Gulf producers failed to convince the
Organization of the Petroleum Exporting Countries to lift production.

Saudi,
the UAE and Kuwait raised output unilaterally. They are the group's most
moderate on prices, keen to prevent energy costs restricting global economic
and fuel demand growth.

Hamli
said the UAE had not yet cut back on the production it added in June to cover
for Libyan civil war losses and was still pumping 2.5 million bpd of its 2.7
million capacity.

"It's
still premature to say. We don't know when Libyan production will be
back," Hamli said.

Libya
pumped 1.6 million bpd at the start of the year and since the fall of Muammar
Gaddafi has restored only a few hundred thousand barrels a day.

Hamli
said it was too early to talk about any decision from OPEC at its next meeting
in December.

He said a
high oil price would lead to more investment in alternative energy and also
more investment in crude production capacity, which would mean less volatile
prices.

"The
higher the capacity, the less fluctuation in prices, except that capacity that
is not in used is very expensive."

He said
an oil pipeline to its Fujairah port from its oilfields that will allow UAE oil
exports in part to bypass the Straits of Hormuz would be completed in "a
few months."

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