OPEC meeting deadlocked over quota increase
JAKARTA (JP): The Organization of Petroleum Exporting Countries (OPEC) Conference was in a deadlock over a proposed quota increase yesterday as several member countries were still opposed to the idea.
"We have not yet talked about the quota (in plenary sessions) since delegates are still holding bilateral talks on that matter," OPEC president I.B. Sudjana told reporters before starting a plenary session yesterday afternoon at the Dharmawangsa Hotel in South Jakarta.
Sudjana, who is also Indonesia's minister of mines and energy, however, promised that the 103rd OPEC Conference would reach a conclusion over the quota by Sunday.
OPEC groups Indonesia, Saudi Arabia, Algeria, Iraq, Kuwait, Libya, Qatar, the United Arab Emirates, Venezuela, Iran and Nigeria, accounting for 40 percent of the world's output.
An increase in the quota was first proposed by Saudi Arabia, the world's largest oil producer, which suggested increasing OPEC's quota to capitalize on a projected increase in the world's oil demand next year.
Saudi Arabia has projected the world's oil demand will increase by more than two million barrels per day (bpd) next year and has called on OPEC to take the largest portion of the new demand before non-OPEC countries seize the new market opportunity.
But, Sudjana said, some members were not as bullish as Saudi Arabia over the world's oil demand growth in view of the current economic crisis befalling East Asian countries.
Sudjana refused to name the countries which remained opposed to the proposed quota increase, but a delegate who asked for anonymity said the countries were Iran, Libya and Algeria.
The source said the three countries were opposed to the increase for fear that it would weaken the price of oil.
Other reasons cited for the inviability of a quota increase were that Libya and Algeria were unequipped to meet higher quotas, while Iran was faced with difficulties in expanding its market as it had no political ties with the United States, the world's oil largest market, the source said.
Iran has the second largest quota of 3.6 million bpd after Saudi Arabia with a quota of eight million bpd. Libya and Algeria have quotas of 1.39 million bpd and 750,000 bpd, respectively.
The OPEC quota stands at 25.033 million bpd, compared with the world demand of 73.48 million bpd this year.
"The battle still has a long way to go. Member countries have not yet even agreed whether or not the quota should be increased. If the delegates agree to an increased quota, there is still a question as to how much it should be increased," the source said.
Iran has so far refused to reveal its position regarding the quota.
When asked yesterday if Iran was willing to compromise over the proposed quota increase, Iranian oil minister Bijan Zanganeh only said: "Maybe".
The Indonesian delegation had earlier said it supported the proposal to raise the quota, adding that it could raise its oil output to 1.5 million bpd from its current quota of 1.33 million bpd.
OPEC imposes quotas as a mechanism to stabilize oil prices but does not sanction violators.
The Ministerial Monitoring Subcommittee, which is charged with monitoring members' compliance to quotas, has concluded that most members exceeded their quotas.
The subcommittee said OPEC members produced a total 27.2 million bpd yearly, compared with their quota of 25.033 bpd.
OPEC governor for Indonesia Purnomo Yusgiantoro, who took part in the subcommittee's meeting, said the subcommittee reached the conclusion after comparing data supplied by each member country with data released by oil production monitoring agencies.
Purnomo said the overproduction, however, had not affected oil prices due to an increase in world demand for oil. (jsk)
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