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OPEC aims to finalize cut deal 'within 48 hours':spokesman
PLATTS
London
Petroleumworld.com 10 11 06
OPEC hopes to finalize an agreement to cut its crude output by 1 million
b/d "within 48 hours," a spokesman for the producers' group said Tuesday,
adding that "the modalities" of such a cut were still being worked out in
continuing consultations.Member countries have already agreed that production should be reduced by
1 million b/d, but have yet to agree on exactly how the cut should be made,
the spokesman told Platts by telephone from the Nigerian capital Abuja.Asked whether the cut would be made on a pro rata basis from an official
but largely notional output ceiling of 28 million b/d or from some other
level, the spokesman said: "That is being worked out."Asked also when OPEC was likely to finalize an agreement, he said: "I
believe within the next 48 hours."The spokesman said there was still no decision on whether ministers
should hold an emergency meeting. "There is still no agreement on that," he
said. "Some think there should be." He added, however, that the logistics of
arranging an emergency meeting at short notice were difficult, with hotels in
Vienna heavily booked.Oil prices fell by close to a dollar and a half October 10 as OPEC
continued to haggle over how to divide up the cut. The NYMEX light, sweet
crude contract fell $1.44 to $58.52/barrel.Last Thursday, a senior OPEC delegate said the plan was to cut actual
output by 1 million b/d, with Saudi Arabia's share of the cut working out at
about 300,000 b/d.But on Sunday, OPEC president Edmund Daukoru -- despite having said last
month that the group had "stopped thinking of quotas a long, long while ago"
-- wrote to the cartel's members asking for a 1 million b/d cut on a pro rata
from the 28 million b/d ceiling.Actual OPEC production bears little relation to official quotas. Most
members are pumping well beyond quota levels, while some others are
underproducing theirs. Indonesia and Venezuela, for example, are
underproducing their notional quotas by some 1.26 million b/d, according to
Platts estimates [see story 1244 GMT].OPEC's official communique after its recent September 11 meeting in
Vienna pledged to keep oil markets balanced but avoided any reference to
ceiling and quotas. "For now it's better to be flexible and keep our options
open," Daukoru, who is also Nigeria's oil minister, said at the time, adding
that OPEC had "deliberately" kept the ceiling and quotas "under benign
neglect."OPEC's intention had been to agree an output cut without the need for a
meeting, but amid the protracted negotiations, several ministers are now
calling for an emergency conference.Iranian state television reported earlier Tuesday that Oil Minister Kazem
Vaziri Hamaneh and his Venezuelan counterpart Rafael Ramirez in a telephone
conversation had expressed concern over oil market conditions and wanted OPEC
to hold an emergency meeting to consider what action to take. Iran's OPEC
governor, Hossein Kazempour Ardebili, was quoted by the Shana energy news
agency saying that ministers were also consulting on possible dates for a
meeting.Algerian Oil Minister Chakib Khelil said at the weekend that it was
important for OPEC credibility that a meeting should be held. Late last week,
Algeria's official news agency APS said a meeting could be held October 18-19.Ministers held consultations late into the night October 9 to try to
reach agreement on Daukoru's proposal, OPEC sources said.So far, Kuwait, Indonesia, Iran, Venezuela, Nigeria, Libya and Algeria
have openly declared support for a cut, but there has been no official word
from the UAE, Qatar or from OPEC kingpin Saudi Arabia.Kuwaiti oil minister Sheikh Ali al-Jarrah said late Monday that there
were "differences over the share" of the cut to be allocated to individual
states.As OPEC negotiations continued, the head of the US energy department's
Energy Information Administration said a 1 million b/d cut would likely
translate to just half that amount in real barrels.EIA Administrator Guy Caruso said Tuesday that the agency was
anticipating OPEC volumes to fall by around 500,000 b/d between the third and
fourth quarters of this year, with a further drop of around 100,000 b/d
expected between the fourth quarter of this year and the first quarter of
2007.For more news, request a free trial to Platts Oilgram News at
http://oilgramnews.platts.com
Platts 10 10 06
Copyright ©2006 Platts. All Rights Reserved.
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