OPEC meeting deadlocked over quota increase

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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