icwales.icnetwork.co.uk Jan 13 2003 The Western Mail - The National Newspaper Of Wales   OPEC needs to compensate for a shortfall in oil exports from Venezuela but it shouldn't change its output target of 23 million barrels a day, the group's most influential oil minister said yesterday.

An increase in the target "would really flood the market", Saudi Arabian Oil Minister Ali Naimi said before an emergency meeting of the Organisation of Petroleum Exporting Countries in Vienna.

Opec called the meeting last week hoping to calm fears of supply problems caused by a strike in Venezuela begun on December 2 by political opponents seeking to oust President Hugo Chavez. The strike has slashed the country's exports by about 2m barrels a day. Venezuela is normally Opec's third-largest producer and a major oil supplier to the United States.

Opec pumps about a third of the world's crude supplies, which total 79m barrels a day.

Naimi acknowledged the Venezuelan strike has deprived the market of crude. "I care about what the market needs," he said.

But he added that Opec's production ceiling of 23m barrels a day should remain unchanged.

Crude prices surged in recent weeks but fell in anticipation of Opec's boosting production.

story.news.yahoo.com Sun Jan 12, 5:06 PM ET By BRUCE STANLEY, AP Business Writer

VIENNA, Austria - OPEC (news - web sites) members agreed Sunday to boost the cartel's oil production target by 6.5 percent to stabilize a world market jittery over a crisis in Venezuela and the possibility of war in Iraq.

The increase of 1.5 million barrels a day — to 24.5 million barrels — would take effect Feb. 1, OPEC President Abdullah bin Hamad Al Attiyah told a news conference at the group's headquarters in Vienna.

Al Attiyah confirmed that the Organization of Petroleum Exporting Countries wants to keep prices of its benchmark blend of crudes at $22-$28 per barrel. Friday prices hovered around $30.

Earlier in the day, Saudi Arabian Oil Minister Ali Naimi said the ceiling should remain at 23 million barrels. Saudi Arabia is OPEC's most influential member and has the bulk of the cartel's spare production capacity.

OPEC said it wanted to calm fears of a supply crunch caused by an ongoing strike in Venezuela. The agreed output hike was near the upper end of what analysts expected.

The strike, launched Dec. 2 by political opponents seeking to oust President Hugo Chavez, has slashed Venezuela's exports by about 2 million barrels a day. Venezuela normally is OPEC's third-largest producer and a major oil supplier to the United States.

"OPEC is trying to send a very strong message that it will do its utmost to stabilize demand and supply," Al Attiyah said after delegates reached their decision in informal talks.

"Now we will wait for the market to react."

The United States praised the move, saying the hike would support economic growth and stability.

"It's a global oil market and the more oil on the market the better for all," U.S. Energy Department spokeswoman Jeanne Lopatto said Sunday. "Instability in the oil market hurts producing and consuming countries alike."

However, Al Attiyah said the arrangement would be only temporary. When Venezuela resumes its normal level of exports, the group's members will meet again to reassess its production target, he said.

It appeared the actual increase in output would be somewhat smaller than 1.5 million barrels a day, as Venezuela is unable now to use its higher quota.

The suddenness of OPEC's decision to call the meeting reflects its surprise at the deterioration in market conditions. Oil ministers for four of the group's 11 members could not make it because of prior commitments.

A fifth minister, Libya's Abdulhafid Mahmoud Zlitni, was due to arrive Sunday but canceled his trip because a sandstorm prevented his plane from leaving the Libyan capital, Tripoli.

Crude prices surged in recent weeks but then fell sharply in anticipation of OPEC's boosting production. Fears about a possible U.S.-led war against Iraq have put upward pressure on world prices.

Al Attiyah insisted that OPEC had not been pressured by the United States or other importers to approve a large increase in production.

OPEC's new production ceiling will be shared among 10 members, but not Iraq. Although it is the 11th member, Iraq does not participate in the group's production agreements because the United Nations (news - web sites) oversees its exports under sanctions dating to the 1991 Persian Gulf War (news - web sites).

OPEC pumps about a third of the world's crude supplies, which total 79 million barrels a day.

Venezuela resisted the Saudi plan for fear of losing market share to OPEC partners that have spare capacity, said Ali Rodriguez, head of the state-run Venezuelan oil company Petroleos de Venezuela S.A.

Rodriguez, speaking at a separate news conference, said his company aimed to increase its production by February to 2.5 million barrels a day from its current, constrained level of 700,000 barrels. Other delegates expressed doubt that Venezuela could restore output so quickly.

The main message for the oil market is that "there will be more barrels," said Yasser Elguindi of Medley Global Advisers, a New York consultancy.

But, "I think this is a very confusing and difficult message, and it will take a while for the market to work out the logistics of it," Elguindi added.

Iraq has the second-biggest oil reserves after Saudi Arabia, and there has been a steady buildup of U.S. troops in the Persian Gulf.

On the New York Mercantile Exchange, February contracts of light, sweet crude futures fell 31 cents Friday to close at $31.68. On London's International Petroleum Exchange, February Brent crude ended at $29.67 a barrel, up 3 cents.

OPEC announced its final decision at a hurriedly called news conference after canceling plans for a formal meeting.

www.forbes.com Reuters, 01.12.03, 7:15 PM ET

SINGAPORE, Jan 13 (Reuters) - NYMEX crude futures fell 48 cents in opening off-hours dealings on Monday after the OPEC producers' cartel agreed to increase daily production by 1.5 million barrels to make up for strike-bound Venezuelan barrels.

Front-month February crude opened 38 cents down at $31.30 a barrel, and quickly skated to an early session low at $31.20.

The Organisation of the Petroleum Exporting Countries agreed on Sunday to increase output by almost seven percent to fill a supply gap left by the opposition-led strike in Venezuela, which has taken two million barrels per day out of the world market.

The cartel's official production ceiling stands at 24.5 million bpd for the 10 members bound by quotas, effective February 1.

OPEC's 11th member, Iraq, exports crude under the United Nations' oil-for-food programme and is excluded from the group's official quotas.

Copyright 2003, Reuters News Service

Reuters, 01.12.03, 7:15 PM ET

SINGAPORE, Jan 13 (Reuters) - NYMEX crude futures fell 48 cents in opening off-hours dealings on Monday after the OPEC producers' cartel agreed to increase daily production by 1.5 million barrels to make up for strike-bound Venezuelan barrels.

Front-month February crude opened 38 cents down at $31.30 a barrel, and quickly skated to an early session low at $31.20.

The Organisation of the Petroleum Exporting Countries agreed on Sunday to increase output by almost seven percent to fill a supply gap left by the opposition-led strike in Venezuela, which has taken two million barrels per day out of the world market.

The cartel's official production ceiling stands at 24.5 million bpd for the 10 members bound by quotas, effective February 1.

OPEC's 11th member, Iraq, exports crude under the United Nations' oil-for-food programme and is excluded from the group's official quotas.

Copyright 2003, Reuters News Service

 www.dailytelegraph.co.uk By Yvette Essen  (Filed: 13/01/2003)

Members of Opec, the Organisation of Petroleum Exporting Countries, yesterday agreed to increase oil output by 1.5m barrels a day in an attempt to ease high prices.

The move follows a 42-day strike at Venezuela's state oil company, which is costing the third-largest oil producing country $50m a day.

Fears over war against Iraq have also pushed the price of Brent crude for February delivery to more than $30 a barrel - a two-year high. Oil supplies to the US are currently down 10pc compared with 2002.

Opec hopes that by increasing its oil output quota for members to 24.5m barrels per day from February 1, prices will return to the cartel's ideal range of $22 to $28. Its 11 members produce around a third of the world's crude oil.

Opec president Abdullah bin Hamad al-Attiyah said: "We are trying to send a strong message to consumers that we are doing our utmost to stabilise the whole market."

He said that because of the Venezuelan crisis over 2m barrels per day had disappeared from the market, but he denied that Opec is trying to take Venezuela's market share. He described the move as a way of "protecting it" and said Opec will reduce the quota once Venezuelan exports recover.

"We will respond very quickly when Venezuela reaches a quantity that will accommodate their market share," Mr Attiyah said.

Venezuela's energy and mines minister, Rafael Ramirez, said he expects production to return to 2.5m barrels a day by next month. "Opec has pledged to defend the stability of the market," he said. "Opec countries committed themselves to defend and support our market share until we can re-establish oil production levels in mid-February."

Mr Attiyah added that Opec could not rule out raising output further, should a war break out in the Middle East. "For sure we'll meet again if there's a war and we'll discuss it and we will take the right decision," he said.

"We will be very close to market and we will see if there is a big shortage for any reason."