OPEC IN THE 1990S

The Organization Of Petroleum Exporting Countries enters the 1990s in an optimistic mood, based mainly on forecasts from various members that rising demand for crude oil spells an end to the unloved system of national quotas.

Forecasts of when the need for quotas will disappear are far from specific, ranging from 1992 onward. That may be vague, but for OPEC's 13 members it is psychologically important.

An end to quotas should signal a return to a world in which non-OPEC production is in long term decline and OPEC's ability to act as a global swing producer determines crude prices.

DISTINCT GROUPS

The prospect of phasing out national production limits during the next few years is gradually separating members of the oil exporters' organization into three distinct groups.

In the first and most important group are countries, mainly in the Middle East, sitting on huge reserves. They will be the main beneficiaries of any long term improvement in oil markets.

The second consists of countries already finding it difficult to generate sustainable production capacity needed to take advantage of higher quotas available in the first half of this year. They are unlikely to reverse this situation.

Then there are the minor players like Ecuador, Gabon, and Qatar that have never had much clout within the OPEC organization. They are unlikely to find enough reserves to change this situation.

First half 1990 will sort out the countries in the second category. Indonesia has a quota of 1.374 million b/d, but it does not have the ability to boost production much above the 1.25 million b/d level of the past few months.

Algeria's quota has been increased to 827,000 b/d from 770,000 b/d, but there is little chance it can top its 750,000 b/d average of 1987.

Without significant new discoveries that can be rapidly developed, Indonesia and Algeria will have to rely more heavily on gas exports for much needed foreign exchange. Indonesia, with blossoming domestic demand for oil products, could even become a net importer.

In the first category, the long term players have started to prepare for the end of quotas by streamlining their state controlled industry structures and approving investment in new production facilities.

THE PACESETTER

Saudi Arabia, OPEC's most powerful member, is setting the pace with a complete reorganization of the industry that is now almost complete.

Saudi Aramco, Saudi Petroleum International, and Saudi Refining International are in place to handle exploration and production, international marketing, and downstream investments outside the kingdom, while Saudi Arabia Marketing & Refining Co. and Petromin Lubricating Oil Co. are responsible for the domestic downstream end of the business.

Manpower has been cut in the new companies, efficiency is up, and featherbedding of state owned affiliates is on the way out.