RI sees no need for OPEC to end oil production cuts
RI sees no need for OPEC to end oil production cuts
JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto said on Friday Indonesia would propose to the
Organization of Petroleum Exporting Countries (OPEC) an extension
of the current production cut through the end of next year.
Kuntoro also said Indonesia did not see the need for any
further output cut by the organization before then.
"We prefer to roll over the existing production rate rather
than opt for new cuts," Kuntoro said in a weekly press
conference.
The minister was speaking ahead of next week's OPEC
ministerial meeting Nov. 25 in Vienna.
OPEC has cut its output twice already this year, respectively
by 1.245 million barrels per day (bpd) in March and by 1.355
million bpd in June, after raising its output ceiling to 27.5
million bpd in November last year.
Indonesia's production level was cut to 1.2 million bpd in
June.
The cuts in output were taken up in response to the continued
decline in oil prices after the organization's Jakarta
ministerial meeting in November last year raised its output
ceiling in a bout of optimism over the rise in market demand.
Oil prices continue to decline despite the total 2.6 million
bpd output cut for this year. OPEC earlier estimated that the
lower production level would push up oil prices to US$17 per
barrel.
Oil prices have remained at the price level of between $11 to
$13 since OPEC announced the June production cut.
Brent crude plunged to a new 10-year low on Wednesday at
$11.15 a barrel.
Indonesia's earnings from crude oil exports in the state
budget for the fiscal year ended in April next year are
calculated on an assumed price of $13 per barrel. The fall in the
crude oil price to below $13 per barrel will deal a big blow to
the state budget.
OPEC has been factionally split in the last few months between
proponents of another round of production cuts to boost flagging
oil prices and those who simply want to extend the existing cuts
through the end of 1999.
Kuntoro speculated that the global recession prompted by the
Asian monetary crisis was a factor behind the slump in oil
prices, but he also blamed traders for pumping their stock on to
the market to make OPEC's output cut ineffective in improving oil
prices.
"Producers, both OPEC and non-OPEC members, and traders should
work hand in hand to improve the oil price," Kuntoro said.
OPEC groups Indonesia, Saudi Arabia, Algeria, Iraq, Kuwait,
Libya, Qatar, the United Arab Emirates, Venezuela, Iran and
Nigeria.
Analysts say the slump in oil prices was also caused by the
fact that OPEC members have mostly failed to abide by the agreed-
on quotas.
According to the data supplied by OPEC primary sources or the
governments of each members, Kuntoro said, only four OPEC members
complied with their production quotas, including Indonesia.
But, according to the data supplied by OPEC secondary sources,
only two members, excluding Indonesia, complied with their
quotas.
The secondary sources include the Energy Information Agency,
the International Energy Agency, the Center for Global Energy
Studies, Platt's, the Cambridge Energy Research Association and
Petroleum International Weekly.
In a related development, Reuters reported on Friday that
Algeria pressed fellow OPEC members to take urgent collective
measures to prop up sagging world oil prices and sent six
presidential envoys to plead its case ahead of the group's
meeting next week.
The envoys, including Oil Minister Youcef Yousfi, will deliver
letters from President Liamine Zeroual to the leaders of Saudi
Arabia, Venezuela, Nigeria, Indonesia, Kuwait, the United Arab
Emirates, Iraq, Libya and Qatar.
"The special envoys will plead for necessary and urgent
collective measures to halt the fall in crude oil prices and find
a mechanism to reverse the trend," the Algerian government said
in a statement.
It said Yousfi will "insist" at next week's Vienna meeting
that all members should respect OPEC decisions on output cuts.
(jsk)