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Oil firms should use profits to invest in refineries: Opec

RIMINI (Italy) — Oil companies with surging third-quarter profits should use money to increase their refining capacity and help ease the pressure on oil prices, a top Opec official said yesterday.

"This is a chance for them to invest,” said Adnan Shihab-Eldin, acting secretary-general of the Organisation of Petroleum Exporting Countries.

Several major oil companies reported third-quarter profits this week.

"We’ve been saying this past year that refining has to increase,” Shihab-Eldin said on the sidelines of a conference here on long-term issues of energy supply. "There needs to be more refining and upgrading.”

Concerns about refining capacity, heightened by the devastation wrought in the U.S. by hurricanes Katrina and Rita, have pushed the price of oil beyond $60 a barrel.

Prices have since pulled back, though concerns remain about the pace of recovery and whether supplies will be adequate going into the Northern Hemisphere winter, when demand for heating oil peaks.

Asked when the global demand for oil could surpass production as reserves diminish, Shihab-Eldin said that was a distant prospect.

"I think it’s decades away — at least three or four decades,” he said.

"It is an established fact that global proven reserves continue to grow on account of new discoveries, as well as reserve growth resulting from advancing technology and improved technology,” Shihab-Eldin said in a speech Sunday.

Shihab-Eldin said Opec had raised capacity and production in the past to meet rising demand, and would continue to do so in the future.

"Opec is fully committed to market stability at all times,” he said.

"This commitment underlines Opec market stabilisation measures which are built around using adequate spare capacity.”

Opec is aiming to increase oil production by 5 billion barrels a day to around 38 billion barrels by 2010.