Asia's oil producers reject call to cut output

Asia's oil producers reject call to cut output

SINGAPORE (Reuters): Some of Asia's main oil producers have rejected calls by the world's biggest exporters to cut output in a bid to raise sunken prices.

The lone voice of support has come from Indonesia -- Asia's only member of the Organization of the Petroleum Exporting Countries (OPEC).

"In principle we agree on the effort to improve oil prices," Indonesian Mines and Energy Minister Kuntoro Mangkusubroto told reporters on Tuesday. "We don't want to be different from other producers, in the interests of the spirit of togetherness."

However, China, Malaysia and Vietnam, with combined daily production of more than four million barrels per day (bpd), have refused to cut production.

Late last week major producers meeting in The Hague, including OPEC's Saudi Arabia, Iran and Venezuela and non-OPEC Mexico, agreed to cut more than two million bpd from supplies to help raise oil prices.

The cuts are planned to start April 1 and come on top of existing pledges from oil suppliers to cut more than three million bpd.

The participants at The Hague meeting have called on all producers to help in efforts to tighten global supplies.

Norway, major exporter, has agreed to cut production. Oman has agreed to cut production also.

The latest round of cuts represent about 2.5 percent of world supplies, but the news has failed to lift oil prices by much.

Since the announcement, New York Mercantile Exchange April crude futures have fallen a few cents, while Brent April crude futures are up just 30 cents.

Brent settled on the Singapore International Monetary Exchange (SIMEX) on Tuesday at $12.60 per barrel, up just four cents from Friday.

Brent averaged just $13.34 per barrel last year -- the lowest average price for more than 20 years -- and the spur to the latest round of production cuts.

In China, oil officials said the country's main producers, China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec) would not be making any special effort to join in the cuts outlined in the Hague pact.

However, they said CNPC plans to cut back one million tonnes of production during 1999 and Sinopec plans to cut as much as 1.5 million tonnes by shutting in uneconomical oil wells.

China produced 162.6 million tonnes of crude in 1998, but was a net importer to the tune of 11.7 million tonnes.

Vietnam, which produces 250,000 bpd, almost entirely for export, said its production was too small to make a difference.

"So if we increase or reduce by several thousand barrels, it is not significant," said Ho Si Thoang, chairman of the board of PetroVietnam, the state oil company.

A spokesman for Malaysian state oil firm Petronas said on Tuesday a cut in its 630,000 bpd production "will not have a significant impact on the market".