Saudi will not raise oil output, Rodriguez says
JAKARTA (JP): President of the Organization of Petroleum Exporting Countries (OPEC), Ali Rodriguez Arague, confirmed on Monday that Saudi Arabia would not go ahead with its plan to raise oil output.
Rodriguez said Saudi's Oil Minister Ali al-Naimi had told OPEC's Secretary General Rilwanu Lukman that the country would not raise its oil production as feared by many other OPEC member countries.
"His (al-Naimi)'s position is that Saudi Arabia will not take any unilateral decision, only by consensus. That's very, very clear for us, they're not going to increase production before there's any decision in OPEC," he told a news conference.
He said that any decision regarding oil production by OPEC members must be taken by consensus with the entire members, not by a member country's singular decision.
Saudi Arabia said last week that in order to calm the crude oil price market it was considering raising its daily output by another 500,000 barrels in addition to the production increase of 708,000 barrels per day agreed earlier by OPEC.
OPEC members are Saudi Arabia, Iran, the United Arab Emirates, Kuwait, Qatar, Nigeria, Libya, Algeria, Venezuela, Indonesia and Iraq, although Iraq has not participated in recent OPEC production pacts. Together, they account for roughly 40 percent of the world's oil production.
The organization's members entered into an agreement in June to raise oil production by 708,000 barrels per day. That move, however, failed to move prices down towards OPEC's US$25 a barrel target.
Saudi's plan to increase production has sparked comments and criticism from OPEC members. Some members have requested Saudi delay its plan until it is known how the June agreement has affected the crude oil price.
Minister of Mines and Energy Susilo Bambang Yudhoyono also criticized the Saudi move.
"Any decision regarding oil production made by a member country must first be discussed at an OPEC meeting. Indonesia's position is that all OPEC member countries should abide by the OPEC agreement," he said.
Rodriguez said that due to high speculation in the market, Saudi's plan to raise output had caused crude prices to fall by $2 to $3 per barrel in only three days since the announcement by the country's Oil Minister, Ali al-Naimi.
"However, we have to be very careful in reading the current situation before taking any decision," he said, adding that OPEC wanted to keep the oil price to stable at between $22 and $28 per barrel.
He said there was a strong possibility that OPEC would make another increase in the oil output in the next quarter, but only if there was a significant increase in demand.
The demand for crude oil has been constantly increasing lately with figures in the U.S. hitting more than four percent and Europe and Asia by around three percent, he said.
"If the demand for oil continues to increase by about 1.3 percent, or about three million barrels, in the next quarter, maybe OPEC will decide to increase production," he said, adding that the demand in the second quarter was about two million barrels per day.
Rodriguez, however, declined to reveal the amount of increase that OPEC must take in order to keep oil price within its desired price range.
He said that the market price was currently oscillating due mainly to lots of speculation, but expects it to return to normal soon.
"Particularly, I believe that in the next days maybe the price will be between $22 and $28 per barrel," he said.
Rodriguez, who is also the Minister of Energy and Mines of Venezuela, is visiting Indonesia as part of a tour of OPEC countries ahead of the cartel's heads-of-state summit in Venezuela in September.
He is scheduled to deliver a speech on the future trends in the oil and gas industry at the Indonesian Investment Summit of Mining and Energy (JIEC) 2000 conference, which was officially opened on Monday evening by President Abdurrahman Wahid. (cst)