Talks to get oil out of politics new agreement?

Press, 9 May 1980, Page 6

Talks to get oil out of politics new agreement?

NZPA-Reuter Taif. Saudi Araoia

The world's main oil exporters have made good progress in early talks on a plan to make oil less con- [ .roversial as an issue mi international relations. Oil Ministers have reported. The Organisation of Petroleum Exporting Countries Ministers met yesterday to work out the plan for a new pricing svsteni under which> prices would continue to: rise but would do so in a manner causing minimal damage to consumer economies.

Delegates to the strategy meeting said they hoped the session would end on schedule today. They have before them a draft plan devised by a committee chaired by the (Saudi Oil Minister (Sheikh Ahmed Zaki Yamani). The Saudis are anxious to restore stability to the world oil market, thrown into disarray after the fall of the Shall when Iranian output fell and the world was short of oil.

Producers rushed to sell at

premium prices, abandoning O.P.E.C.’s unified price system based on a benchmark rate.

The proposed new system would adjust oil prices each quarter, indexing them to fluctuations in a basket of the dollar and nine other currencies, and the industrial countries’ economic growth and inflation rates. Two obstacles face the Taif conference. First, to make the mechanism work there would need

to be some way of tailoring supply to demand if a threatened.

But some produce-sA among them the Saudis [are the biggest exporters, x (oppose any kind of O.P.E.C& ■ production programming’-? (They say it is their sover-4 eign national right to decide’? themselves how much oil* 1 they produce. A number of Ministers** were saying that this ©tZ stacle might be overcome by Is (an informal, “gentlemen’s** agreement” whereby, as In-’-l dotiesia’s Energy Minister 5 (Dr Subroto) put it: "Those - who could, would regulate in a time of glut.” The Saudis, keen on economic stability, have the greatest capacity to regulated output, delegates pointed t. out.

The delegates said a pdssi- ’ bly more difficult hurdle ‘ was that Of getting O.P.E.C,' back to a “benchmark'* * price, a condition for actual- ’ ly implementing whatever might be agreed in principle ■ in Taif on a future price “ mechanism. J

Delegates said price hard- » liners like Iran. Libya, and ’ Algeria might find it diffi- ’■ cult to return to a “ben- < chmark" when consumers [■ remained ready to pay vari- *> ous high rates in their anx- ( iety to stockpile oil. > O.P.E.C. will tackle the 5 “benchmark” issue at its next price-fixing session in Jl Algiers on June 9. The long- ? term strategy cannot be im- 4 plemented before it has been > approved by an O.P.E.C, ? summit meeting due in No« ■ vember. j