Jakarta calls for OPEC to retain oil production ceiling

Jakarta calls for OPEC to retain oil production ceiling

JAKARTA (JP): Indonesia will propose that the Organization of Petroleum Exporting Countries (OPEC) retain its current oil production ceiling amid concern about rising output among non- member countries.

Minister of Mines and Energy Ida Bagus Sudjana said yesterday that if OPEC failed to maintain its output ceiling at the current level of 24.52 million barrels per day (bpd), oil prices were likely to drop as the growth of oil demand would not be as high as that of the supply, especially from non-OPEC countries.

"We will make efforts that, for the coming six months at least, we restrain ourselves, so as to see how developments are in 1996," Sudjana told reporters after meeting with President Soeharto at the Bina Graha presidential office.

OPEC members agreed in January to extend the organization's quota of 24.52 million bpd for one year.

Sudjana said he hoped OPEC will roll over its production at its ministerial conference in Vienna on Nov. 21.

Sudjana said OPEC members with low production costs might push for higher output. He did not name countries.

"They don't care if the prices fall to $15 a barrel or even $13. They can still make profits because they have low production cost," Sudjana said. "But our costs are relatively high."

AFP quoted the weekly Middle East Economic Survey as reporting on Monday that OPEC's crude oil output had already reached 25.51 million bpd, or almost one million bpd over its official production ceiling.

The weekly named Iran and Saudi Arabia as having increased their crude oil output. Iran pumped out 3.79 million bpd last month, above its 3.6 million bpd quota. Saudi Arabia stepped up production from 8.074 million bpd to 8.15 million bpd, although its exports remained steady at around its eight million bpd quota.

Meanwhile, according to a Reuters survey of oil industry participants, three OPEC members -- Venezuela, Nigeria and Qatar -- were guilty of overshooting official OPEC ceiling of 24.52 million bpd by almost one million bpd.

While members of OPEC were producing about 25 million bpd, non-OPEC producers were churning out double that, Sudjana said.

"Non-OPEC countries really want to step up their production and this will really influence world oil prices," he added.

The minister said that Indonesia's benchmark crude, Minas, still fetched above $16 per barrel, even approaching $17. He warned, however, that with increasing world supply, prices might soon weaken.

He said OPEC holds about two-thirds of the world's oil reserves of one trillion barrels. If non-OPEC countries continued to step up their production, "in not too long a time they may exhaust their reserves," he added. (rid)