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OPEC set to cut output amid carping over quotas
By Adam Plowright
AFP
PARIS
Petroleumworld.com 12 11 06Ministers from the 11-member Organisation of Petroleum Exporting Countries are likely to decide on a further cut in OPEC oil output when they gather Thursday in Abuja, Nigeria, analysts say.
The cartel, which regulates its oil supply to maximise export revenues and control prices, is eager to keep crude around 60 dollars per barrel and a further cut would support the market heading into the northern hemisphere winter.
The meeting is also expected to include some behind-the-scenes friction as countries reconvene to assess adherence to their individual production limits.
OPEC lowered its output quota at its last meeting in Qatar to stem a slide in prices, which had fallen from a high of 78 dollars per barrel in July to about 58 dollars at the time of the meeting in October.
The 1.2-million-barrel-per-day cut was distributed among the 10 members bound by quota system, but there are suspicions of cheating amid evidence that some members have continued pumping at previous levels.
"We estimate the actual cuts out of the 1.2 million barrel announcement at something about 80 percent, or 800,000 barrels a day," said Carl Calabro, a senior analyst at Washington-based energy consultancy PFC Energy.
"I'm sure there will be some finger-pointing at first. There were 400,000 that were supposed to be cut, so where've they gone?"
Saudi Arabia has most strictly adhered to its limits, he said, with the over-production suspects being chiefly Iran and Venezuela.
"There are some people that talk a good game, who talk about cutting production, but don't," he said.
A lack of discipline among OPEC members has bedevilled the cartel in the past and the reduction in Qatar was greeted with scepticism by some analysts, who suggested some members would find it too difficult to forego oil revenues.
For the meeting in Abuja, prices are back above the 60 dollar mark at 62.03 dollars per barrel, but mild winter weather in the United States and Europe, inventory levels, and a slowdown in the US economy are likely to convince members of the case for another cut.
Ministers from the leading exporters have all given notice in recent weeks that the group is prepared to pare back its quota, which binds all members except Iraq and currently stands at 26.3 million bpd.
Asked at the beginning of December whether the OPEC cut would be 500,000 bpd, the Nigerian oil minister and OPEC president, Edmund Daukoru, told journalists: "When we meet, we will look at the data and the trend and I do not expect anything less at this meeting."
The oil minister of Saudi Arabia, Ali al-Nuaimi, who is considered the most influential member owing to the country's vast resources, has also hinted that OPEC will cut again.
"They will probably lower their production ceiling because they have mentioned this for some time ... especially the Saudi minister which is the kingpin of the OPEC meeting machine," said Manouchehr Takin, a senior oil analyst at the Center for Global Energy Studies.
Indonesian Energy Minister Purnomo Yusgiantoro said Friday that OPEC was likely to cut by 1.0-1.5 million bpd. Representatives from Algeria, Iran, Qatar and Venezuela have all previously expressed support for more action.
Veronica Smart, an analyst at the Energy Information Centre, a British consultancy, said a reduction would be designed to defend the 60-dollar price ceiling.
"It's not their official position, but 60 dollars a barrel has been mentioned as a ceiling. They took a cut when prices were below 60 (in Qatar) so that reinforces the view," she said.
The impact of another cut on the market would depend on whether the reduction was adhered to and eventually felt by oil buyers.
Looking ahead, the meeting comes amid heightened interest in expanding the the OPEC club, which is currently dominated by producers in the Middle East.
Angola, sub-Saharan Africa's second-biggest oil producer, said at the end of November that it was seeking to join the group. Ecudor and Sudan have also expressed interest.
"The attitude is likely to be 'there are three people standing in queue, by all means bring them in'," said Calabro.
OPEC has said the issue of expansion will not be formally discussed at the meeting however, with discussions likely to take place early next year.
AFP 10 0303 GMT 12 06
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