Oil’s big two want quotas up

Press, 11 October 1986, Page 11

Oil’s big two want quotas up

NZPA-Reute'r Geneva Kuwait, backed by Saudi Arabia, has forced the special O.P.E.C. conference in Geneva to confront the divisive issue of assigning new oil production levels to limit world supplies and support fragile prices. Kuwait’s Oil Minister, Sheikh Ali al-Khalifa alSabah, and the Saudi Arabian Oil Minister, Sheikh Ahmed Zaki Yamani, two of the most powerful members of the 13-nation group, have said they want their quotas raised. “There will be no change in my position, even if I am in a minority of one, which I am not,” Sheikh Ali said yesterday. A clear majority of Organisation of Petroleum Exporting Countries Ministers wanted to simply extend an existing interim pact if setting new quotas proved too difficult.

That pact, forged after months of bitter haggling, cut O.P.E.C. production by some three million barrels a day and boosted prices from SUS 9 ($l7) a barrel to about SUSI 4 ($27). The two-month agreement, which will expire at the end of this month, was a last-ditch bid by the

once all-powerful oil cartel to reverse a price collapse from about SUS3O ($59) a barrel in December. Sheikh Ali, whose country paid more dearly than the others for the interim accord, was adamant that the quota problem must be resolved at this meeting. “I want it now,” he told reporters. Without acceptance by Kuwait and Saudi Arabia, the largest O.P.E.C. exporter, any decision by the other Ministers would be meaningless. Delegates said the two Gulf States could sit tight until the others came around. The United Arab Emirates’ Minister, Sheikh Mana Said alOteiba, whose policies often mirror those of his two Gulf neighbours, said Saudi Arabia and Kuwait were “trying to get us to work harder (on setting new quotas). They are correct.” But Sheikh Oteiba said

noticeable progress has been made and if settling quotas proved impossible now, then “extension of the present arrangement is in hand.” The Ministers are due to hold a regular, twice-yearly, conference in mid-December. Sheikh Oteiba said pledges by his country and Venezuela to honour more fully the interim pact would remove 500,000 barrels a day from the market and boost prices “very soon” to between SUSI 7 and SUS2O ($33 and $39) a barrel. The Ministers have agreed to put the veteran O.P.E.C. mediator, Dr Subroto, the Indonesian Oil Minister, in charge of a technical experts committee drawn from all 13 countries to recommend a system for new quotas. The committee narrowed some 23 possible criteria to about six — oil reserves, production capacity, historic production

levels, population, domestic consumption, and production costs. The experts will report to a Ministerial committee headed by the O.P.E.C. President, Mr. Rilwanu Lukman, of Nigeria, and an effort will be made to allot each country a percentage in ah over-all ceiling. The ceiling could be raised or lowered, depending on world demand, but the individual percentage would remain, constant. Ministers hoped that would stop the seemingly endless debate over the size of each country’s quota. The last permanent O.P.E.C. ceiling was set at 16 million barrels daily in October, 1984. The arrangement was undermined by consistent cheating on individual production limits and prices. The interim accord in August set a ceiling of 16.8 million barrels daily.