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Experts urge GCC states to take measures to face falling oil prices

Oil expert Mohammad Al-Shatti
Oil expert Mohammad Al-Shatti

By Nawaf Al-Deqbasi

DOHA, Nov 7 (KUNA) -- Two Kuwaiti oil experts urged on Saturday GCC countries to put plans and take reform measures to face the falling oil prices in the global markets as they depend mainly on oil revenues to support their budgets.
In remarks to KUNA following their participation in the symposium focusing on the repercussions of the drop in oil prices on oil exporting countries, the experts stressed the importance of reducing spending and taking austerity measures in these countries to cope with the falling prices.
Mohammad Al-Shatti expected a continuous drop in oil prices which started since 2014 until disorder at the global markets is addressed, especially the markets witness a recovery of some oil exporting countries.
Oil markets see a return of production of some oil exporting countries like Iran which is expected to double its production in 2016 and Libya which can resume its output of 1.7 million barrels per day (bpd) anytime, he said, referring that the OPEC's decision to keep output at 30 million bpd was correct.
He noted that countries which depend mainly on oil revenues should adopt policies and take certain procedures to cope with falling oil prices so as to achieve balance.
He called for establishing a working environment and an incentive culture of reducing spending to help take austerity measures and review subsidy policy.
He added such procedures should include implementing a clear plan and diversifying income resources and investment as well as the participation of private sector to support the public sector in construction and development which attract foreign investment and create partnership with promising markets and oil companies.
Al-Shatti further said this also includes promoting participation of the private sector, expanding the use of solar applications in electricity generation and investing in developing techniques seeking to raise the efficiency of energy use and expansion in the petrochemical industry.
He expected that the coming period may witness a rise in oil prices.
On his part, Amer Al-Tamimi said the symposium focused on the effects of the drop in oil prices on economies of exporting countries, including Kuwait whose oil revenues make up about 95 percent of government ones.
He urged the Kuwaiti government to reconsider financial policies, and reducing spending and subsidy of fuel, electricity, water, food, construction materials and others.
He advised the State of Kuwait to give the private sector a role in order to bear the burdens of creating job opportunities and managing sectors and facilities.
He noted that the current price of oil which hits USD 45 per barrel is far from the equilibrium price of budget which is USD 60, expecting the oil prices will not rise in the coming period due to the current economic indicators in various oil consuming industrial countries, an economic recession in Europe and Japan, and a decline in growth in China and India.
He said the policies of keeping the oil output through OPEC may achieve positive results for GCC countries as the cost of production in the region is low compared with that in other producing countries. (Pick up previous) nnd.hm