All oil producers urged to cut output

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)