Oil Powers to Act Jointly in Case of Y2K Glitch

Updated 4:25 PM ET November 29, 1999

By Tom Ashby

CARACAS (Reuters) - Oil powers Venezuela, Mexico and Saudi Arabia, the top suppliers of oil to the United States, said on Monday they would act jointly to face up to any Y2K interruptions in global oil supply.

But any supply disruption was "highly improbable", after extensive tests and simulations, they said in a joint statement from Caracas.

The trio added it was committed to guaranteeing a balanced market around the key date, when some computers risk malfunction.

The announcement was welcomed by the West's energy watchdog, the International Energy Agency (IEA), which called the move "statesmanlike".

"Saudi Arabia, Mexico and Venezuela want to assure the participants in international oil markets that oil production in their countries is not at risk," said the statement from Venezuela's Energy and Mines Ministry.

"If any problem associated with Y2K does occur in the coming months, which is highly improbable, Saudi Arabia, Mexico and Venezuela, in coordination with other oil producing countries, would respond in the appropriate way," it added.

The three exporters have emerged as key managers of global oil supply since early 1998 when they masterminded production cuts in response to the deepest price crash in decades.

As a result of the cuts, many countries have a large margin of unused capacity, but some big producers have done little to prepare their computers for the date change.

Saudi Arabia, Venezuela and Mexico all say they have made extensive preparations to face up to the bug. But some other producers, particularly Iraq, have done little to update their systems, which could misinterpret the change of year as a malfunction and shut down crucial operations.

The IEA said it welcomed reports that the three countries "intend to make good oil supplies that may be lost due to computer problems at the New Year".

"Producers and consumers alike need confident oil markets. This is a significant contribution to maintaining that confidence," the IEA added in a communiqu.

The Venezuelan statement said the trio maintained their commitment keeping prices stable and at levels that serve producer and consumer interests.

Oil prices have more than doubled this year to nine-year highs as a result of the output cuts, which are scheduled to expire in March 2000.

Consumers are expected to stock up on fuel ahead of December 31, while producers are filling inventories at home and abroad to ensure the availability of supplies in case of production problems.

The Paris-based IEA, whose members are taken from the Organization for Economic Cooperation and Development (OECD), insists countries hold a minimum oil stock level as a condition of membership.

Last week the U.S. government said it was prepared to sell crude oil from its enormous Strategic Petroleum Reserve if a Y2K problem disrupted supply.

Venezuelan state oil company Petroleos de Venezuela S.A. said last week it will halt tanker dockings and oil loadings for about 10 hours around midnight on December 31 as a preventive measure against Y2K problems.

Other exporters are likely to take similar measures, but that is expected to have little impact on the availability of oil, which can take weeks to ship to consumer markets.

======================================== End

Ray

-- Ray (ray@totacc.com), November 29, 1999

Answers

Weren't these the countries that were behind in addressing y2k? Now they are talking as if they plan to be part of the solution rather than part of the problem. It is truly amazing that so much progress has been made in some of these countries in just a few months. If that is true, we have much to learn from them.

-- Dave (dannco@hotmail.com), November 29, 1999.

Rather broad statements from the big Three today. I'm not buying this crap. This appears to be nothing more than a feel good statement. If the Vens are down then we'll help pick up the pieces by selling some of our oil. Yeah, and if our Saudi brothers have trouble we'll save the day by selling some of our quality Ven barrels! Duh. As if they wouldn't do this under any other circumstances. It's called cash flow people. Revenues. Black gold. And as far as "not at risk" that's simply a gross oversimplification of a highly complex issue designed to allay the skyrocketing price of oil (inlationary? hellooo?). The Iraqis must have been short some barrels on Friday as they moved into a cooperative stance all of a sudden. There's little doubt at this point that Saddam made his money and got gone. Downstreamer is correct. Excellent entry point.

116--Y2K-Stability: Crude production "not at risk" Caracas (Platt's)--29Nov1999/859 am EST/1359 GMT "Saudi Arabia, Mexico and Venezuela want to assure the participants in the international oil market that their countries' crude production is not at risk in that exhaustive tests and simulations have been taken" to guarantee "measures necessary to maintain an uninterrupted supply of crude" during the coming months, the joint statemnt said. Begins p115 --Platt's Global Alert-- [0116] [GE] [N] [QQ]

115--Y2K won't affect stability of oil market: oil producers Caracas (Platt's)--29Nov1999/859 am EST/1359 GMT Saudi Arabia, Mexico and Venezuela said Monday they would act jointly to ensure that any problems relating to the Y2K issue would not disrupt the supply of crude to world oil markets. If problems occur relating to Y2K in the coming months, "a situation considered highly improbable," the three countries would, together with other petroleum producing nations, respond in an appropriate manner to any interruption in world crude supply, the three producers said in a joint statement issued by the Venezuelan ministry of mines and energy. The three countries firmly maintain their commitment to guarantee market stability, the statement added. Begins p115 --Platt's Global Alert-- [0115] [GE] [N] [QQ]

Big oil exporters agree to joint Y2K vigilance CARACAS - VENEZUELA, MEXICO, SAUDI SAY Y2K VERY UNLIKELY TO AFFECT OIL SUPPLY CARACAS, Nov 29 (Reuters) - Oil powers Venezuela, Mexico and Saudi Arabia, in a joint statement issued in Caracas, said Monday that Y2K was highly unlikely to affect world oil supply, but they would respond jointly to any possible glitch. "Saudi Arabia, Mexico and Venezuela want to assure the participants in international oil markets that oil production in their countries is not at risk," said a joint statement from Venezuela's Energy and Mines Ministry. "If any problem associated with Y2K does occur in the coming months, which is highly improbable, Saudi Arabia, Mexico and Venezuela, in coordination with other oil producing countries, would respond in the appropriate way," the statement added.

-- Gordon (g_gecko_69@hotmail.com), November 29, 1999.

Do I believe this? Well, if the price and availability stays roughly the same as it is now (winter seasonal adjustments allowed for) come next March, then I will believe. Until then, I am comfortably anchored beneath a huge question mark.

-- Irving (irvingf@myremarq.com), November 29, 1999.

So what if we have crude oil, are we going to be able transport, refine, and distribute? I haven't a clue, but I sure would like to have a better idea of what the real picture is.

-- Gambler (scotanna@arosnet.com), November 29, 1999.