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.