Lagos — Following the rise in crude prices at the international market yesterday, member states of the Organisation of Petroleum Exporting Countries (OPEC) may increase their output targets when the group meets in Luanda, Angola on December 22.

Speaking to Reuters yesterday, OPEC's Secretary-General, Mr. Abdalla el-Badri, said if oil prices continue to rise; if the global economy continues to recover and there is fall in global inventories, the organisation would not hesitate to increase production targets at its December meeting.

Crude oil slipped towards $80 yesterday as a stronger dollar encouraged investors to lock into profits from a 12-month high on Wednesday.

US crude oil futures fell 63 cents to $80.74 a barrel by 1205 GMT, having dipped as low as $79.90. London Brent crude fell 49 cents to $79.20. On Wednesday, US crude surged to $82, the highest price since October last year, as weekly US government oil data showed a large drop in gasoline inventories over the last week and fuel demand rising about 4 per cent year-on-year.

El-Badri said OPEC was comfortable with prices at current levels, particularly compared to the price drop to near $30 late last year.

"If these prices will continue; if we see the stocks go back to normal levels, the five-year average; if we see there is real economic growth, I am sure our member countries will take a decision to increase the production. This is up to the ministers to decide.

"The market is improving, but we would like to see evidence. If we see a shortage, OPEC will not hesitate to increase the production," eI-Badri said.

According to him, "When I go back to December and I look at the price now, I think we are in a very comfortable zone at this time."

The current prices, he said, would ensure the revival of all 35 upstream projects, which OPEC had put on hold due to the drop in oil prices, to boost output capacity.

El-Badri, however, declined to reveal what the projects are, but said collectively, they would account for 1.2 million barrels per day of production capacity.

Oil prices touched an all-time high of $147.27 a barrel on July 11, 2008, but fell to $32.40 in December same year as the world grappled with recessionary pressures, which eroded global oil demand.

Prompted by the declining oil prices, OPEC said last year it was delaying some 35 oil projects till after 2013.

The secretary-general had said at a Chatham House energy conference that the group's revenue had been adversely affected by the plunge in the oil price, a development which he said prompted member countries to suspend 35 of the 150 projects due to come on line in the next few years to expand supply.

He said the falling prices of crude oil not only affected investments in both the upstream and downstream, but would delay future investments. He also raised fears that if the present situation did not change, future investments would be cancelled, a development which would automatically affect oil supply to the market.

"If the present situation does not change and we do not return to reasonable prices for oil products, the likely effects will be far-reaching. Very low prices will affect investments in both the upstream and downstream.

"This will have two main consequences. First, it will delay future investments in the sector, and second, it may also lead to the cancellation of further future investments. Either way, this will automatically affect oil supply to the market. In addition, it will also have an effect on gas supply," he said.

However, with the current price rally of $ 80 a barrel, OPEC said it is in a comfortable zone.

Crude production averaged 28.83 million barrels per day p/d in September, up 40,000 b/d from August's 28.79 million b/d, a Platts survey of OPEC and oil industry sources and analysts on October 8 revealed.

The survey attributed the production increase to higher volumes from Angola and Nigeria, where production, which had suffered setback owing to years of crisis in the Niger Delta region, has bounced back.

"Production has risen again, but mainly because of higher volumes from Angola and Nigeria. The latter aided by a decline in militant attacks on oil installations in the Niger Delta, the country's main producing area," Platts Global Director of Oil, John Kingston, said.

The survey noted that increases from Angola and Nigeria totalling 150,000 b/d were offset by decreases from Ecuador, Iran , Iraq , Saudi Arabia, the United Arab Emirates (UAE) and Venezuela totalling 110,000 b/d.

At its September 9 meeting, OPEC had agreed to maintain output quotas at 24.845 million barrels a day on hopes that a recovery in the world economy would keep oil prices high.

The group had resolved that there was no need to change production in view of the price rally and instead called for stricter compliance with existing curbs.

To help boost prices, which had dropped below $35 a barrel, OPEC, supplier of about 40 per cent of global oil, agreed last year that members with quotas should cut output by a combined 4.2 million barrels a day to 24.845 million barrels per day.

The September meeting was the third time this year the group had met without changing output.

Excluding Iraq, which does not participate in OPEC output agreements, production from the OPEC-11, the members bound by quotas, the survey disclosed, rose by 90,000 b/d to 26.33 million b/d in September, up from 26.24 million b/d in August.

The latest estimates leave the OPEC-11 overproducing their 24.845 million b/d output target by about 1.49 million b/d.

Compliance with the 4.2 million b/d of cuts agreed late last year has been declining since April alongside a broad firming of oil prices. Having peaked at close to 82 per cent in March, compliance fell to 64.6 per cent in September, Platts said.

However el-Badri, who spoke in Abuja last week, put the current level of compliance at 65 per cent.