Opec ineffective, Dr M says ahead of global oil policy meeting

Opec ineffective, Dr M says ahead of global oil policy meeting

KUALA LUMPUR,. There’s less than a month before oil producing countries meet to decide their output and the Organisation of the Petroleum Exporting Countries (Opec) has come under rebuke from Malaysia’s prime minister.

“Opec is not effective. They are always at loggerheads with each other so they cannot make decision.

“What is more important is the production of shale oil from America,” Tun Dr Mahathir Mohamad told CNBC in an interview in Singapore yesterday.

He was asked if the group should act to stabilise oil prices when it meets with non-Opec member states on December 5 in Vienna, Austria to review the current world supply of oil.

Dr Mahathir also said Malaysia’s economy is not fully reliant on its oil and gas yields, even though he had previously said the government will be using money from state oil company Petronas to pay some of its debts.

“We’re not dependent on oil revenue. You see, we’re a small producer of oil, 600 barrels a day — nothing compared to countries like Saudi, which is entirely dependent upon oil revenue.

“We have other sources of revenue: We produce a lot of palm oil, which used to fetch quite good prices. We also have 82 per cent of our exports made up of manufactured goods, so how can you say we’re dependent upon oil revenue? It’s not,” he told CNBC.

Malaysia is an oil producing nation but is not part of the 15-member Opec which controls over 80 per cent of the global oil output and its prices.

Due to a glut two years ago that saw crude oil prices plunge to under US$30 a barrel from US$100, the major oil producers started cutting down output.

Malaysia agreed in December 2016 to cut its production by 20,000 barrels a day to the agreed 600 million barrels until the next meeting the Vienna meet.