I.B. Sudjana calls for return of oil ceiling

JAKARTA (JP): Outgoing Minister of Mines and Energy I.B. Sudjana, who is also president of the Organization of Petroleum Exporting Countries (OPEC), has called on the organization to return to the old oil supply quota to improve oil prices.

The old supply quota was 25.03 million barrel per day (bpd), compared with the current quota of 27.5 million bpd, which was agreed on by OPEC ministers during a meeting last November in Jakarta.

In his letter dated March 10 to OPEC Secretary-General Rilwanu Lukman, a copy of which was made available to reporters yesterday, Sudjana ruled out that oversupply was the sole factor behind the current drop in oil prices, saying "there are complex factors affecting oil prices".

But OPEC, along with non-OPEC oil-producing countries, could effectively improve oil prices by reducing supply, regardless of the factors behind the drop in oil prices.

"Thus, I again suggest ... to return to the previous quota and its allocation at the level before the November 1996 Conference," Sudjana said.

Sudjana asked Rilwanu to pass his message on to all OPEC ministers.

According to OPEC's governor in Indonesia, Purnomo Yusgiantoro, copies of Sudjana's letter were sent by OPEC's secretariat in Vienna to all OPEC ministers on March 12.

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

OPEC oil supplies now account for about 40 percent of the world's total output of about 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 oil price was caused by an oversupply resulting from an increase in OPEC and non-OPEC oil producing countries's supplies.

They said OPEC had failed to anticipate the decrease in oil demand due to the economic crisis which had been besetting East Asian countries since the middle of last year.

They also said some OPEC members had produced oil in excess of their quota.

Earlier, Sudjana had called on OPEC ministers to hold an emergency meeting to improve oil prices, but the proposal has not been agreed upon by all ministers.

The OPEC secretariat had invited OPEC ministers to discuss the proposal during a meeting of OPEC's Ministerial Monitoring Sub- Committee (MMSC) -- a body assigned to supervise members' compliance with their quota.

But the meeting, which was initially scheduled for next Monday, has been delayed until unspecified date, Purnomo said.

"OPEC has said the MMSC meeting is postponed because Kuwait's oil minister cannot attend the meeting," Purnomo said.

Purnomo said the postponement of the meeting was designed to give more time to try to persuade all OPEC ministers to agree on an emergency meeting.

Some OPEC members have refused to go to the meeting unless other members promise to comply with their quota.

Among the members who are opposed to the emergency meeting is Venezuela, whose oil overproduction reached 800,000 bpd.

But Purnomo said Venezuela notified the OPEC secretariat recently that it would be willing to reduce its output if all other members did the same. (jsk)