OPEC Seeks Help from Independent Producers to Stabilize Market Efe

July 19, 2000

Caracas, Jul 19 (EFE).- OPEC is talking with independent producers with an eye towards an eventual boost in crude oil output to ensure market stability, the organization's two top officials said in Caracas Wednesday.

Secretary General Rilwanu Lukman, a Nigerian, told a press conference that the Organization of Petroleum-Exporting Countries (OPEC) had spoken with Norway and Mexico, "which had agreed to place extra (crude) on the market to avert any shortage."

Venezuelan Energy Minister and OPEC president Ali Rodriguez told EFE that Russia and Oman have also been cooperating with OPEC "for some time, both to increase and to reduce" production.

The four independent producers have been collaborating with OPEC since 1999, when they acceded to an accord reducing production to force up prices, which had reached their lowest level in a decade.

Lukman, who met with Venezuelan President Hugo Chavez on the first day of his official visit to Caracas, said that if it's necessary, OPEC will put an additional 500,000 barrels a day of crude oil on the market to moderate prices, but he avoided specifying a date for this action.

The eventual boost in supply is part of the implementation of a mechanism intended to stabilize oil prices within a fluctuating band of between 22 and 28 dollars a barrel.

The agreement calls for OPEC nations to automatically increase production by 500,000 barrels per day when the average market price of the seven varieties of crude produced by the cartel exceeds 28 dollars a barrel for 20 consecutive trading days, a condition that was met last Friday.

It appears, however, that the production hike will not occur at the end of this month, as OPEC says that the agreement applies only to the period after July 1, when the last agreed increase of 708,000 barrels per day went into effect.

Lukman said that the 11 OPEC countries have agreed to make decisions jointly and "and as far as we're aware, to remain ready to act jointly to avoid price distortions."

"OPEC maintains its commitment and is prepared to stabilize the price per barrel," Lukman said, adding that he does not want the market to overheat.

"We are ready to take any action that might be needed to moderate the market," said the OPEC secretary general, a staunch supporter of the effectiveness of the price bands system.

Lukman refused to comment on rumors that Saudi Arabia is already pumping additional crude onto the market, saying that any comment would be speculation "and is not positive."

OPEC president Rodriguez said that the only credible source on this question is the Saudi oil minister, Ali al Naimi, who told OPEC that "they (the Saudis) will take no unilateral action."

Lukman, who is visiting Caracas to take part in preparations for the second OPEC summit in September, will give a lecture Thursday on the past, present and future of the cartel, founded in 1960. EFE

http://denver.petroleumplace.com/egatecom/scream/./2000/07/19/ECO/0000-0049-MWM.SIF.SHI.html

-- Cave Man (caves@are.us), July 20, 2000

Answers

The reason no extra capacity is being added is that all the oil producers are too busy partying over having no Y2K problems this year. Yeah, right.

-- Sure (MustBe@Fun.com), July 20, 2000.

This is getting hilarious.

-- Will (righthere@home.now), July 20, 2000.