All oil producers urged to cut output

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto asked all OPEC members and independent oil producers yesterday to voluntarily cut their output to prop up the crude oil price.

Kuntoro said it was important that all oil producing countries cut their production to reduce the crude oversupply on the world market.

He said the crude oil price had improved over the past several days due a voluntary production cut by some members of the Organization of Petroleum Exporting Countries (OPEC).

"The price of crude oil rose to US$15 per barrel today (Wednesday). It could further increase to $17 per barrel if all producers (OPEC and non-OPEC members) join the move to cut their production," he told journalists after opening a seminar on Indonesia's fuel subsidy.

The minister said that pushing the crude oil price level to at least $17 per barrel was essential for Indonesia to meet the state receipt target from the oil and gas sector.

The oil and gas receipts in the 1998/1999 state budget uses a reference crude oil price of $17 per barrel.

Kuntoro said Indonesia would cut its crude oil output by 70,000 barrels per day (bpd) from its current OPEC quota level of 1.45 million bpd.

He said the move would bring Indonesia in line with other OPEC members in a move to help boost the oil price on the world market.

"We have decided to follow other OPEC members in a move to improve the world's oil price by cutting output by 70,000 barrels per day, because we want the price of crude oil to meet our 1998/1999 state budgetary price of $17 per barrel," he said.

He said the move would come into effect April 1.

Indonesia currently produces about 1.4 million bpd of crude oil, slightly less than the allowed quota. The country's daily output is set at 1.3 million bpd after the reduction.

Last week, OPEC members as well as some non-OPEC oil-producing countries resolved to reduce crude oil supplies to the world market by 1.6 million to 2 million bpd, with an initial target of 1.1 million bpd cut from April 1.

OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United States, the United Arab Emirates and Venezuela.

OPEC oil supplies now account for about 40 percent of the world's total output of 75 million bpd.

Oil prices have plunged by more than 30 percent since OPEC ministers agreed last November to increase their output ceiling by 10 percent to 27.5 million bpd.

Analysts said the drop in the oil price was caused by an oversupply resulting from an increase in OPEC and non-OPEC oil producing countries' supplies.

Kuntoro said other OPEC members had agreed to cut their oil output, such as Saudi Arabia which will cut output by 300,000 bpd, Venezuela by 200,000 bpd, Kuwait by 150,000 bpd and the United Arab Emirates by 125,000 bpd.

Mexico, a non-OPEC oil producing country, has also agreed to cut output by 100,000 bpd, he added.

He said he hoped that all OPEC and non-OPEC oil-producing countries would follow the move, adding that a higher oil price would help Indonesia survive its economic crisis. (gis)