OPEC considers production cut to accommodate Iraq
Vanguard By Hector Igbikiowubo with Agency report Wednesday, June 11, 2003
LAGOS—ORGANISATION of Petroleum Exporting Countries (OPEC) appears split over a potential cut in production to allow Iraq come back on stream, while non-OPEC Mexico said there was no need to tighten the tap. Abdullah al-Attiyah, president of the organisation, said the cartel would consider a cut at its meeting tomorrow in Qatar’s capital, Doha. “Now is the right time for OPEC to study how to accommodate Iraq, how to make room for Iraq, by, you know, cutting production from others,” Attiyah, also Qatar’s oil minister, told reporters. Attiyah, citing Iraqi authorities, said Iraq’s crude production would likely be one million barrels per day and beyond from mid-June.
"Iraq will come to the market. That’s their right. We have to help them and we also have to make room for them.” On current price levels, Attiyah said crude was selling within OPEC’s price band mechanism of 22-28 dollars a barrel. “It’s not a high price. It’s still in the band. We’re happy to see it in the band, we don’t want to see it over the band. We’re working very hard to keep prices within the band.” But Kuwait called to roll over OPEC crude oil production at least until September because prices were satisfactory.
“It’s better to continue with our production because we think we are still in the average price (band),” acting oil minister, Sheikh Ahmed Fahd al-Ahmed al-Sabah said. “The latest report was 27 dollars a barrel. Therefore we are in a good situation. We have to continue, from now to September,” Sheikh Ahmed said. “I think we will always have to cooperate with non-OPEC,” he said, adding that the cartel needed the support of non-OPEC producers “for the future.” But non-OPEC Mexico cast doubts on the possibility that oil exporters that are not members of the cartel would automatically join in any cut.
“From our perception the market is going well,” Juan Antonio Barges, undersecretary for hydrocarbons, pointed out. “I don’t feel a (output) cut is necessary according to the economic information that we have.” Asked what Mexico would likely do if OPEC were to cut production, Barges said: “We’ll have to do our review. As I have said, I don’t believe there’s a need for a cut.”
Mexico is one of five non-OPEC states to attend the extraordinary OPEC meeting here as observers. The Venezuela, UAE, Nigeria, Kuwait, Libya, Indonesia, Algeria and Qatar. The seat of Iraq, where OPEC was born 43 years go, will be vacant. The US-British coalition ruling post-war Iraq has said it would be up to a future “representative” Iraqi government to decide whether the country remains inside the organisation.
Algeria earlier made a detailed case of the situation in some member countries including his, pointing out that the economy is slowing down. The Algerian Energy Minister Chakib Khelil told reporters that:”You have a tremendous devaluation of the dollar in respect to the euro. You have all these concerns about SARS and its effects on tourism, on demand and also you have overproduction by non-OPEC countries,” he said. Khelil said the greenback’s depreciation affected countries like Algeria, which imports heavily from Euquarter,” he said.
OPEC kingpin Saudi Arabia has not taken a clear position so far, but in a joint statement with Venezuela and Mexico issued Friday in Madrid said the current oil market was balanced, “with supplies adequate to meet present and future world demand for oil.”