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Some Nations Tap Oil Reserves Dow Jones Business News Wednesday, September 27, 2000; 9:26 AM

The President of the Organization of Petroleum Exporting Countries said some European Union countries, according to trusted sources, are modestly tapping from their strategic oil reserves.

Ali Rodriguez, speaking after the first OPEC ministers' meeting at the group's heads of state summit, said "I know of one." Rodriguez declined to say which countries were reportedly tapping their strategic reserves, how many might be tapping them, or how much oil could be entering the market.

OPEC ministers have expressed divergent views with respect to industrialized nations drawing from their reserves. While some say the action could help stabilize oil prices, others point out that the strategic reserves are designed to alleviate supply disruptions.

Mr. Rodriguez, who is also Venezuela's oil minister, added that OPEC's price band mechanism is flexible and both the upper and the lower limits can be adjusted.

The price band, he explained, can't admit "rigidities," given the increasing costs of exploration and production.

He said OPEC is looking for an "equilibrium point," and if necessary, would adjust the band.

The price band aims to guide prices within a $22 to $28 per barrel range by adjusting supply. OPEC says prices at these levels will be beneficial to both producers and consumers.

Separately, Venezuelan President Hugo Chavez suggested Tuesday that the mechanism governing output by the Organization of Petroleum Exporting Countries' could change to reflect higher global oil prices.

OPEC's price-band mechanism, by which production is modified when prices in the oil cartel's basket of crude slip outside the $22-to-$28 per barrel range, could be raised, Chavez said. Any such decision would be taken at an OPEC meeting in Vienna Nov. 12.

Chavez and other OPEC leaders, meeting at the the organization's first summit in 25 years, sidestepped growing demands that they increase oil production and insisted they were focusing on a summit declaration of long-term goals that will be released Thursday.

Delegates from OPEC's 11 member nations had mixed reactions to Washington's decision to tap into its strategic oil reserves to push down oil prices. Iran, the world's No. 2 producer after Saudi Arabia, called it a political move with no long-term impact.

Venezuela originally embraced the move, but Chavez said Tuesday he didn't think it was necessary. The index of crude oil prices that OPEC watches was $29.09 a barrel at the close of markets Monday, down from about $31 in mid-September.

Most oil experts believe prices will remain high because of low inventories and the fact that OPEC  which churns out about 40% of the world's oil  is producing at near capacity.

But OPEC Secretary General Rilwanu Lukman of Nigeria said Tuesday the U.S. move  coupled with OPEC's latest production boost of 800,000 barrels a day starting in October  will accelerate a fall in prices.

) 2000 Dow Jones & Company

http://www.washingtonpost.com/wp-dyn/articles/A27200-2000Sep27.html

-- Martin Thompson (mthom1927@aol.com), September 27, 2000

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Nando Times

International Energy Agency to look at oil options

The Associated Press

PARIS (September 27, 2000 8:40 a.m. EDT http://www.nandotimes.com) - The International Energy Agency on Wednesday said its governing board will meet Oct. 4 to discuss the oil market and how recent boosts in oil production will have affected oil prices.

However, the Paris-based agency sees no need for the sale of oil from the strategic reserves of its members.

"There is no need for a collective stock draw," IEA official Fiona Davis said.

Oil markets are watching closely to see whether Europe will follow the lead of the United States which said last week it would release 30 million barrels of crude oil from its emergency reserves to soothe fears of fuel shortages.

Spanish Prime Minister Jose Maria Aznar met French President Jacques Chirac on Tuesday to press his case that the 15-nation EU should also release oil from stocks intended for use in case of supply disruptions.

Chirac, whose country currently holds the EU's rotating presidency, agreed to back Aznar but put off consideration of the Spanish initiative until an EU summit Oct. 13-14 in the French town of Biarritz.

This gives some leeway for prices to fall, thus easing the political pressure to act fast. Soaring prices triggered protests across Europe this month, with many consumers blaming Europe's governments for not acting decisively to reduce prices.

Crude oil prices already tumbled off record highs after the U.S. announcement last week.

Davis said the IEA believes the oil should only be tapped if there is a sudden cut in supply, whereas the current problems relate to price and political pressures.

She said next Wednesday's meeting will be "a collective discussion" of the latest developments in the oil market.

The discussion over the possible use of strategic reserves comes as the Organization of Petroleum Exporting Countries meets in Venezuela. Earlier this month, OPEC decided to boost production by 800,000 barrels a day starting in October, to ease pressure on prices.

OPEC President and Venezuelan Oil Minister Ali Rodriguez said late Tuesday that at least one European Union country was modestly tapping its own reserves. He declined to elaborate.

-- Rachel Gibson (rgibson@hotmail.com), September 27, 2000.