Which countries will be willing to cut oil output? OPEC members face difficult talks on April 24
<a href=www.middle-east-online.com>Middle East On-line First Published 2003-04-15, Last Updated 2003-04-15 15:04:23 By Amelie Herenstein - PARIS
Analysts argue OPEC members will reach compromise to cut oil production in bid to avoid slide in crude prices.
OPEC is hoping to avoid a slide in crude prices by cutting production later this month, but experts say an agreement on who should reduce output by how much could prove hard to broker between member countries eager to preserve market share.
After days of uncertainty over the date of its next ministerial meeting, called earlier this month by president Abdullah bin Hamad al-Attiyah, an official at the oil cartel's Vienna headquarters confirmed on Tuesday the gathering had been scheduled for April 24.
"The date of April 24 is now official, and it is confirmed that the meeting will be held in Vienna," the official said on condition of anonymity.
Ministers from 10 of the organisation's 11 mainly Arab member states are set to attend the meeting, with Iraq's seat likely to remain empty, another OPEC source said.
Both al-Attiyah, who is Qatar's serving energy minister, and his Algerian counterpart Chakib Khelil recently suggested that output would have to come down.
Khelil called for OPEC members to begin strictly observing the cartel's current production quotas which add up to a total 24.5 million barrels a day.
This would amount to a production cut of around two million barrels a day without touching the quotas, according to unnamed OPEC officials.
Despite signs of an emerging consensus that production will have to be cut this month, however, the way the cuts are shared out between OPEC governments could still prove delicate.
Saudi Arabia is likely to be in the spotlight, after it increased output by 21 percent to 9.5 million barrels a day from November to March, to compensate for production problems linked to crises in Iraq, Nigeria and Venezuela, according to a report by the London-based Centre for Global Energy Studies (CGES), published on Monday.
"Saudi Arabia will be looked at to lead the charge," said Raad Alkadiri, director of Washington-based consultancy PFC Energy.
"But the Saudis will want to ensure that other members of OPEC are also cutting back on production."
Monday's CGES report also suggested the Saudi position could be key to the outcome of the OPEC talks.
"Some within the Saudi kingdom consider that a production cut should be shared out between members in proportion to their production level - which could lead to a possible conflict," it said.
OPEC would have to reduce oil output to keep prices within its target band of 22-28 dollars per barrel, the report said, adding that a cut of half a million barrels a day would be enough to meet that goal if Iraqi oil were to remain offstream for the next few months.
But Iraqi oil soon could start to flow again, after Turkey said on Tuesday that storage facilities at its southern Ceyhan terminal were full, with 1.8 million tonnes of Iraqi crude waiting to be cleared for sale by the United Nations or a postwar Iraqi administration.
PFC Energy's Alkadiri predicted a compromise would be reached combining a reduction in quotas with a pledge to stick more closely to the OPEC output limits.
Pierre Noel, an analyst with French think-tank IFRI, said OPEC governments would have little trouble reaching a formal agreement - it was what they did next that would really count.
"It's a very unstable system. You've got every interest in promising cuts during the meeting and then not implementing them when you get home," he said. "The history of OPEC is a history of cheating."
However, Noel said the cartel's past three years in maintaining oil price stability could curb members' inclination to bust quotas.
Some had probably already quietly cut production, he added. "It seems certain to me that Gulf states, particularly Saudi Arabia, will already have reduced output."
The April 24 meeting would be more concerned with sending the right message to markets, Noel predicted.