Sat, 25 Mar 2000

OPEC meeting will be tough, Bambang says

JAKARTA (JP): Minister of Mines and Energy Susilo Bambang Yudhoyono said the approaching ministerial meeting of the Organization of Petroleum Producing Countries (OPEC) could be very tough as the camps for and against oil output increases were equally strong in the group.

"I've heard that OPEC is divided over the issue of a quota increase. I think there will be a heated debate during the meeting," Bambang said on Friday.

Bambang reiterated Indonesia's stance to support only a slight increase in the production quota at the meeting scheduled for Monday in Vienna. Bambang will leave for Vienna on Saturday.

OPEC is being pressured by the United States to raise output to reduce oil prices.

Oil prices have risen to above US$30 per barrel over the past several months from around $10 a year ago after it and other non- OPEC oil producers decided to cut global output.

Former OPEC Secretary General Subroto said on Thursday OPEC had never and would never bow to external forces, including the U.S., in formulating its oil policy.

"OPEC formed its policy based on the regular study of the global oil supply and demand. If there is an oversupply, it will cut the oil quota and vice versa," Subroto said.

Subroto noted that OPEC included hardliners Iran, Iraq and Algeria, who will most certainly turn deaf ears to the U.S.

"I learned that the three countries object to the proposal to increase the oil quota. They prefer a wait-and-see stance for two and three months before making a decision whether to raise the quota," Subroto said.

U.S. Energy Secretary Bill Richardson is now on global tour to persuade OPEC and non-OPEC oil producers to raise production.

Bambang said he hasn't spoken with Richardson on the issue but had been informed the latter would telephone him.

The U.S House of Representatives approved legislation on Wednesday pressuring OPEC to raise production and reaffirming President Clinton's authority to cut U.S. aid and arms sales to OPEC and nations that control world prices.

The U.S. Energy Information Administration demanded OPEC boost oil output by 2 million barrels per day to return world stocks and prices to normal levels.

This is higher than many OPEC countries, including Indonesia will find acceptable.

Bambang earlier said Indonesia would only accept a 1 million bpd increase in output to keep oil prices between $22 and $26 per barrel.

The Indonesian government assumes an oil price of $20 per barrel in the April-December 2000 state budget.

Leading producers, including Saudi Arabia, are believed to favor extra OPEC supply of about 1.5 million barrels a day.

Meanwhile, Iran said Friday it was still against a rise in oil production to bring prices down.

"A rise in production in the current situation is not justified and a fall in prices risks making the market unstable," state radio quoted senior Iranian oil ministry official Hossein Kazem-Pur Ardebili as saying.

"Those who, through pressure or embargo, want to control prices showed no concern when the price per barrel was $10," Ardebili said, as reported by AFP. (jsk/bkm)