OPEC set to keep tab on output

By Frits H. Pangemanan

KUTA, Bali (JP): The Organization of Petroleum Exporting Countries (OPEC) yesterday agreed to extend its output ceiling of 24.52 million barrels per day (bpd) until the end of 1995 and appointed a former Nigerian minister as secretary general.

"We hope the extension of the output ceiling will gradually prop up oil prices on the world market to nearly US$20 a barrel," OPEC President I.B. Sudjana, who is also Indonesian Minister of Mines and Energy, told a press conference here after the second day of the organization's 97th ministerial conference.

The meeting, opened by President Soeharto on Monday, is scheduled to conclude today.

Sudjana said the meeting also appointed Rilwanu Lukman of Nigeria as secretary general to replace Subroto of Indonesia and elected Indonesia's Director General of Oil and Gas Suyitno Patmosukismo as chairman of OPEC's board of governors.

The extension of the output ceiling allows Algeria to produce up to 750,000 bpd of crude oil, Gabon 287,000 bpd, Indonesia 1.33 million bpd, Iran 3.6 million bpd, Iraq (currently still under a trade embargo of the United Nations) 400,000 bpd, Kuwait two million bpd, Libya 1.39 million bpd, Nigeria 1.86 million bpd, Qatar 378, 000 bpd, Saudi Arabia eight million bpd, the United Arab Emirates (UAE) 2.16 million bpd and Venezuela nearly 2.36 bpd.

According to Reuters, the Bali agreement sent oil prices 20 cents higher in Singapore, where North Sea Brent crude oil, the world benchmark, traded at US$17.12 per barrel yesterday.

"With the long-term rollover of the output ceiling, we want to maintain market stability, which has taken place over the past quarters of this year," Sudjana said.

Qatar's Minister of Energy and Industry Abdullah Bin Hamad Al- Attiyah, who had insisted from the start of the three-day conference on the need for a 12-month rollover, told The Jakarta Post that OPEC ministers will have an opportunity to review the implementation of the rollover in their meeting in the middle of next year.

Saudi Arabia's Minister of Petroleum and Mineral Resources Hisham M. Nazer said: "We hope that next year will be a good year."

Demand

Former OPEC secretary general Subroto said that the extended output ceiling is expected to support improvement of prices because demand for OPEC oil will likely increase next year.

"Next year's demand for OPEC's oil is estimated at 26.13 million bpd in the first quarter, 23.91 million bpd in the second quarter, 24.50 million bpd in the third quarter and 26.70 million bpd in the last quarter," he said.

Subroto said the quota extension is likely to prop up oil prices by around $2 to $3 a barrel next year.

Since 1990, OPEC has set a reference price of $21 a barrel but oil prices have remained several dollars below that level, except after the Iraqi invasion of Kuwait in August 1990, when prices shot up to nearly $40. Prices averaged at $18.44 in 1992 and $16.33 in 1993 and are expected to be higher in 1994.

Sudjana is optimistic that the prices will likely go to the $20 mark before the end of 1995 on the grounds that oil demand will rapidly increase next year.

"Today, OPEC oil prices average $17 per barrel," he said.

Subroto said that in spite of the consensus on the quota rollover, Iraq had reservations because it wanted the resumption of its 3.14-million-bpd before the Gulf War in 1990.

He quoted an Iraqi delegate as saying: "Although we have agreed on the rollover, we insist on our previous ceiling."

Yesterday's conference also reached a unanimous decision to appoint Rilwanu Lukman of Nigeria as OPEC's new secretary general to replace Subroto, who ended his two three-year terms in June.

Lukman, a Mining Engineering graduate from the Royal School of Mines of the Imperial College of Science, Technology and Medicine of the University of London, won the competition over two other candidates, Hussein Kazembur-Ardebili of Iran and Alirio Parra, a former Venezuelan oil minister.

Subroto said that the decision was reached after Iran, which insisted on rejecting the Venezuelan candidate for the post, supported Lukman under a condition that its candidate get the next turn.