OPEC told to unite in setting prices

OPEC told to unite in setting prices

By Frits H. Pangemanan

KUTA, Bali (JP): President Soeharto yesterday urged ministers
of the Organization of Petroleum Exporting Countries (OPEC)
meeting here to close ranks and take measures to prop up oil
prices on the world market.

"I appeal to OPEC to close ranks and act wisely so that the
world will get the right assessment of the oil that we produce
with difficulty," he said at the opening of OPEC's 97th
ministerial meeting at the Pertamina Cottages here.

The agenda of the three-day ministerial meeting includes the
determination of OPEC's production ceiling, election of a new
secretary general, appointment of the head of its board of
governors and calculation of its annual budget.

President Soeharto urged the 12-member organization to
maintain unity and mutual trust and to avoid things harmful to
the interests of members.

"Only with strong solidarity and unity can OPEC show to the
world that it is a respectable organization with a good mission,"
said Soeharto.

Stressing the importance of proper pricing, the President
pointed out that only reasonable prices would permit
reinvestments to discover new oil reserves.

He cautioned that Indonesia, OPEC's only Asian member and the
region's second largest producer, would sooner or later become a
net oil-importing country if not enough new reserves were
discovered.

"Should this happen Indonesia will no longer have the right to
be a member of this organization," he said, adding that
Indonesia, together with other OPEC members, could actually play
an active role in striking a better balance between the world's
demand for oil and its supply.

After the opening ceremony, the President, who was accompanied
by Minister of Mining and Energy I.B. Sudjana, met with all the
OPEC ministers and delegates for 20 minutes.

The 34-year-old organization comprises Algeria, Gabon,
Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi
Arabia, the United Arab Emirates and Venezuela.

Dependence

Soeharto said that most Asia-Pacific countries have now become
major oil importers and their dependence on imports
will become even greater if producers in this region cannot
increase their output.

The former secretary general of OPEC Subroto quoted OPEC
projections, stating that in the next century, around 50 percent
of the world's oil demand will come from developing countries,
especially from Asia and the Pacific, compared to 30 percent at
present.

Soeharto added that Indonesia has anticipated the possibility
of the oil depletion by diversifying the sources of its energy
away from oil.

"The contribution of the oil and gas sector to our gross
domestic product rose from 18 percent in the 1970s to around 24
percent in 1981 but went down to 10.8 percent in 1993," he said.

He cautioned, however, that as Indonesia's economy continued
to grow so would its demand for oil and that if no new reserves
were found, Indonesia would turn from an exporter into a net
importer.

Nigeria's representative to OPEC Mohammed Barkindo told
reporters after the opening session that the best way to beef up
the oil prices is by maintaining the present ceiling of 24.52
million barrels per day (bpd), which has remained unchanged since
September last year.

OPEC President Abdallah Salem El-Badri of Libya concurred that
most members were in favor of extending the present ceiling for
at least six months from early next year.

"Other ministers are talking about the six and twelve-month
rollover, but ... according to our discussion yesterday (Sunday),
there were some agreements that six months will be reasonable
time," he told the press after the ceremony.

Sudjana, who was elected the new chairman of OPEC yesterday
afternoon, agreed that the rollover is the best way for
stabilizing the oil market.

"We have reached a consensus to rollover the ceiling either
for six months or 12 months," Sudjana told The Jakarta Post and
the Reuter news agency yesterday.

OPEC's Governor for Venezuela Gonzalo Plaza told the Post that
members who exceeded their output quotas should abide by the
ceiling to help raise the oil prices.

The meeting is expected to elect a new secretary general of
OPEC today to replace Subroto from Indonesia which had held that
post for about six years.