Venezuela to back Opec supply cut plan

<a href=economictimes.indiatimes.com>REUTERS-Economic Times India MONDAY, APRIL 14, 2003 07:34:35 AM ]

CARACAS: Venezuela is ready to back any decision by the Organisation of Petroleum Exporting Countries (Opec) to reduce output in order to keep prices within the cartel's preferred $22-28 a barrel price band, said President Hugo Chavez.

If it is necessary to cut, we would be ready to back that Opec policy, Mr Chavez told reporters during a press conference. If we have to cut production by one million barrels per day (bpd), or 1.5m bpd, or 1.8m bpd, we would be ready to cut, Mr Chavez said.

The Opec, which increased output ahead of a US-led attack on Iraq, has become concerned that world oil markets are oversupplied and is planning an emergency meeting to discuss cuts to keep prices in its preferred range. Concerns about an Iraqi supply disruption before the war helped to bolster oil prices. Prices have fallen since the war started despite the interruption of Iraqi shipments, settling at just over $28 a barrel for US crude on Friday after flirting with $40 a barrel earlier in the year.

The cartel could decide just to rein in extra supplies it pumped before the war began, or go further and cut official production quotas. Venezuelan oil minister Rafael Ramirez on Thursday called on the cartel to reduce output to comply with quotas, and said Opec would work with other large producers to support prices.

Mr Ramirez agreed with comments from Opec president Abdullah al-Attiyah last week that oil markets are oversupplied by around two million bpd.

Mr Attiyah also said the oversupply could grow to over four million bpd with the restoration of full Nigerian output and the resumption of Iraqi oil exports. About 40% of Nigeria's 2.2m bpd of output was shut-in by ethnic unrest in the western Niger Delta last month. The cartel is considering a range of dates for its emergency meeting, between April 24 and May 7.

Venezuela, the world's No 5 oil exporter, is recovering from a two-month national strike started December 2 by foes of Mr Chavez that cut output from more than 3.1m bpd to 40,000 bpd at its low point.

Government officials say output has been restored close to pre-strike levels despite Venezuela's official Opec quota of 2.8m bpd. They say Opec has allowed the South American member-state to raise production above agreed limits in order to make up for production lost during the strike.