OPEC considers production quota increase

OPEC members, who today will consider a sixth increase in production quotas, said they plan to increase investments in oil refineries to help meet fuel demand that has propelled gasoline pump prices to records.

Qatar on Sunday announced plans to triple its refinery capacity by 2010, in part through a $1.8 billion project. Saudi officials said they may build a second domestic refinery to serve export markets and double the size of a refining venture in Port Arthur, Texas. Kuwait said it's in talks with the Bush administration to build an oil refinery in the United States.

"Today, the whole world should think very carefully and put a lot of investment into refining capacity," Qatar's oil minister, Abdullah bin Hamad al-Attiyah, said Sunday in Vienna, where the Organization of Petroleum Exporting Countries meets today and Tuesday. "After Hurricane Katrina, we found out that the problem is the capacity of refiners."

Existing oil refineries around the world are struggling to keep pace with surging demand for diesel, gasoline and jet fuel. Crude oil last month reached a record $70.85 a barrel after Hurricane Katrina flooded refineries along the U.S. Gulf of Mexico coast, taking off line 10 percent of the nation's capacity. Even before the storm, oil executives and OPEC officials said a lack of refining investment is keeping prices high.

At least nine new plants are being planned by OPEC members in their own countries, increasing global refining capacity by 2.2 million barrels of oil a day, or 2.7 percent, by 2011. World crude oil prices have doubled in the last two years, even as the producer group increased output by 12 percent.

Record pump prices

OPEC President Sheikh Ahmad Fahd al-Sabah Sunday said he will propose the group this week raise quotas by 500,000 barrels a day, or 1.8 percent, to 28.5 million barrels. The members are already producing more than that amount. Another proposal is for members to offer for sale every barrel they can produce.

U.S. gasoline prices at the pump this month reached a record $3 a gallon, on average, while fuel users in the U.K. and France protested over rising fuel costs. A French government threat of windfall taxes on oil industry profits led Total SA, Europe largest refiner, to increase spending by 800 million euros ($980 million) in the next five years.

The hurricane disruptions may act as a catalyst for investment in refining, according to Merrill Lynch & Co. senior energy strategist Francisco Blanch.

Qatar's plan