Oil price drop may trigger further cuts

Oil price drop may trigger further cuts

KUWAIT (Agencies): Kuwait and Qatar said yesterday OPEC could
decide on further oil production cuts if world prices fell
further.

Oil Minister Sheikh Saud Nasser al-Sabah said "reviewing
additional cuts by OPEC states (would be required) if we find
that oil prices are still low," the official Kuwait News Agency
(KUNA) reported.

Organization of Petroleum Exporting Countries (OPEC) ministers
are due to meet on June 24 in Vienna.

Kuwait agreed on a 125,000 barrel per day (bpd) cut as of
April 1 as part of OPEC's accord at an extraordinary meeting in
Vienna in March to cut supplies in an effort to rescue world oil
prices.

Kuwait has an OPEC quota of 2.19 million bpd.

Sheikh Saud said world oil markets were passing through a
"critical time" but expressed "optimism if OPEC members abided by
the cut which was agreed upon", predicting a "clear change" in
prices in the coming three months, KUNA added.

Brent crude futures for June delivery closed 28 cents lower on
Friday at $14.36 a barrel, nearly 20 percent below year-on-year
levels and still within sight of nine-year lows.

Qatari Energy and Industry Minister Abdullah bin Hamad al-
Attiyah said yesterday he was not happy with the current level of
world oil prices, adding that "at least $18 a barrel" for North
Sea Brent crude would be satisfactory.

He confirmed that Qatar has already implemented its promised
30,000 barrels a day output cut in accordance with an OPEC
agreement reached last month to boost prices.

Attiyah did not say how much Qatar might be willing to cut
under a new agreement. According to industry estimates, Qatar is
OPEC's largest overproducer in percentage terms. The Paris-based
International Energy Agency put its March production at 710,000
bpd, well above its OPEC quota of 413,000 bpd.

Late Saturday, Oil Minister Erwin Arrieta of Venezuela --
widely referred to as OPEC's largest overproducer -- said his
country might accept further oil production cuts if it becomes
apparent that they are necessary to stabilize the market. The IEA
put Venezuela's March production at 3.37 million bpd, 30% above
its 2.583 million bpd quota.

OPEC's basket of seven crude oils, which it uses to gauge the
market, was priced at $13.12 a barrel Thursday, down from $12.61
on Wednesday. When OPEC met at the end of November and increased
its production ceiling by 10%, the basket averaged $18.81.

Later, in an address to the Oil, Gas and Petrochemicals in
Qatar conference, Attiyah said Qatar's total oil capacity is
expected to exceed 800,000 bpd by the year 2000 as a result of
ongoing onshore and offshore development efforts.

Attiyah said that Phase 1 development of Qatar's giant North
Field gas field has already provided enough gas to meet domestic
consumption demands for fuel and feedstock for local industries.

"This has allowed us to expand our petrochemical and
fertilizer plants and to initiate new gas-based projects," the
minister said. He noted that the Qatar Fertilizer Co. (Qafco) III
expansion project, which increased ammonia and urea production
enabled the company to become the largest producer of fertilizer
in the Middle East.

In the downstream sector, new industrial projects include the
expansion and upgrading of Mesaieed's oil refinery, the
construction of a new petrochemicals complex in Mesaieed and the
projects of the Qatar Vinyl Co., Qatar Fuel Additives Co. and
Qatar Clean Energy Co.

He said further gas-sector development has resulted in Qatar
beginning liquefied natural gas exports last year from the Qatar
Liquefied Natural Gas Co. (QatarGas), located in the Ras Laffan
industrial city.

The minister noted that other LNG export projects in the works
include the Ras Laffan Natural Gas Co. Ltd. (RasGas) project,
which aims to produce five million metric tons a year in the
first phase. He said the project, which is under construction,
will come onstream before the end of this year.