OPEC agrees to raise output ceiling by 10%

OPEC agrees to raise output ceiling by 10%

JAKARTA (JP): The Organization of Petroleum Exporting
Countries (OPEC) agreed yesterday to raise its output ceiling by
about 10 percent to 27.5 million barrels per day (bpd) for the
first half of next year, from 25.03 million pbd.

OPEC secretary-general Rilwanu Lukman said delegates at the
103rd OPEC Conference at the Dharmawangsa hotel set the new
output ceiling to benefit from the growth in world oil demand,
which the organization estimated to be between 1.5 million bpd
and two million bpd next year.

World demand this year is estimated at 73.5 million bpd.

Under the new ceiling, Algeria had its quota increased by 21.3
percent to 908,500 bpd, while the other 10 countries uniformly
received a quota increase of 9.5 percent.

The ceiling increase was first proposed by Saudi Arabia, but
several countries, including Libya, Algeria, and Iran, opposed
the idea until Friday.

Lukman said that after more than six hours of meetings
yesterday all the delegates agreed to the ceiling increase as
well as their quota allocations.

"(There were) absolutely no reservations (about the ceiling
and quotas) on the part of any one of the delegations," said
Lukman, who was re-elected as the secretary-general during the
meeting.

OPEC groups Indonesia, Saudi Arabia, Algeria, Iraq, Kuwait,
Libya, Qatar, the United Arab Emirates, Venezuela, Iran, and
Nigeria. It accounts for 40 percent of the world's output.

OPEC last increased its output ceiling four years ago.

When asked about whether the ceiling increase might
destabilize oil prices, Lukman said OPEC purposely raised the
ceiling in order to keep prices stable amid the world' growing
demand for oil.

New OPEC president I.B. Sudjana, who is also Indonesia's
Minister of Mines and Energy, said the conference estimated the
world's demand for OPEC oil would be more than 28 million bpd but
OPEC had set a lower ceiling to keep prices stable.

Former OPEC secretary-general Subroto also believed oil prices
would remain strong despite the ceiling increase since the new
ceiling was similar to OPEC's actual output this year.

"Prices might go down to begin with, but they will soon
recover," Subroto said.

The Ministerial Monitoring Subcommittee -- which is charged
with monitoring members' compliance with their own ceiling --
reported during the conference that most members had violated
their quotas, taking total OPEC output to 27.2 million bpd this
year, or about 2.2 million bpd higher than its ceiling.

Lukman said all member countries stressed their commitment to
the new ceiling and individual allocations, but he stressed OPEC
would not impose any sanctions on quota violators.

Sudjana said he was satisfied with the results of the
conference, adding that the new quota allocated for Indonesia
would enable Indonesia get more revenue from oil exports.

Indonesia's quota was increased to 1.456 million bpd, from
1.33 million bpd.

The state-owned oil and gas company, Pertamina, has stated
that Indonesia has enough spare capacity to increase the
country's oil output to 1.5 million bpd.

Other delegates also expressed satisfaction with the results
of the conference.

"We are happy. I think prices will hold up for the time
being," Kuwaiti Oil Minister Issa al-Mazidi said. The country's
new quota is 2.190 million bpd.

Iranian delegates also reacted positively. "The ceiling is
well below the call on OPEC oil if members adhere (to quotas),"
one said.

Sudjana said OPEC delegates would have a free day today and
would meet President Soeharto on the closing day, tomorrow, at
the hotel. (jsk)