Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 22, 1995 TAG: 9511220052
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: DIRK BEVERIDGE ASSOCIATED PRESS
DATELINE: VIENNA, AUSTRIA LENGTH: Medium
OPEC President Erwin Arrieta opened the cartel's winter meeting Tuesday by accusing non-OPEC oil producers of unfairly pumping too much. Arrieta warned that markets could reach ``an imbalance which points toward the potential risk of entering into a dangerous price war.''
Other ministers said OPEC needs to get its own act together in addition to worrying about the non-OPEC oil.
OPEC has a daily production ceiling of 24.52 million barrels, but members are exceeding it by about 900,000 barrels a day - with more than a third of that said to come from Venezuela. Arrieta, who is Venezuela's oil minister, denies overproducing. A barrel equals 42 gallons.
Independent analysts and OPEC's own staff predict that if OPEC doesn't cut production to around the level of its ceiling, prices could weaken substantially next year as more non-OPEC oil comes onto the market.
Several ministers said they would seek ways to crack down on the cheaters, although OPEC never has found a way to accomplish that.
``There is extra production, and this will be controlled,'' said Rakadh Bin Salem Bin Hamed Bin Rakadh, the acting oil minister for the United Arab Emirates.
Libyan oil minister Abdalla Salem El-Badri and Kuwaiti oil minister Abdul Mohsen Medej Al-Medej said OPEC might better police output by monitoring oil as it flows out of wells, rather than using the current system of reporting oil that is either sold on the market or placed in overseas storage.
Questions about the cheating got an unwelcome response from OPEC Secretary General Rilwanu Lukman. Lukman, a Nigerian, held a brief news conference Tuesday evening and challenged questions about the potential supply glut mentioned in an internal OPEC report.
``Who tells you there is any damage to limit?'' Lukman snapped.
Some analysts have said that about the best OPEC can do these days is limit damage.
OPEC has recently stood on the sidelines as other producers, such as oil companies working in the North Sea, boost production to meet the rise in world demand.
OPEC has been selling oil for about $4 to $5 below its target of $21 a barrel.
OPEC ministers suggest they have ways to improve the market, but traders weren't convinced. Even while the OPEC ministers were behind closed doors Tuesday, prices were inching lower on futures markets.
OPEC members are Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
by CNB