OPEC official hints at 1 million b/d reduction in production quotas

Nov. 1, 2001
Alí Rodríguez Araque, secretary general of the Organization of Petroleum Exporting Countries, said Thursday that a cut in the organization's production quota of up to 1 million b/d could be on the agenda at the group's forthcoming ministerial meeting in Vienna on Nov. 14.

By the OGJ Online Staff

LONDON, Nov. 1 -- Alí Rodríguez Araque, secretary general of the Organization of Petroleum Exporting Countries (OPEC), said Thursday that a cut in the organization's production quota of up to 1 million b/d could be on the agenda at the group's forthcoming ministerial meeting in Vienna on Nov. 14.

Speaking at a London conference on the Norwegian oil industry, he said that if all oil producers allowed recessionary pressures to drive prices down, the industry would face a lack of funds for the investment necessary to secure future oil and gas production.

He said, "We are all aware of the dire consequences of low prices, and we all must be alert to the pitfalls that await a recession driving down prices. No oil producers can go it alone. We must cooperate and remember that producers need consumers as much as consumers need producers."

The OPEC official said that if a decision is not made soon on output controls, "We will suffer the effects like in 1998."

He said that among the developments that could be hit if prices fell through a lack of producer cooperation was the expansion of the natural gas industry. He said that OPEC members such as Iran had massive gas reserves, and that Norway and the UK also had much to gain from the development of their gas assets.

The OPEC secretary general met Norway's new Oil Minister, Einar Steensnæs, during the conference, to discuss Norway's attitude on output controls, but was told that oil prices aren't low enough for Norway, the world's seventh-largest producer, to instruct companies to restrict production.

The UK Energy Minister Brian Wilson was at the conference. The UK has never entered into any collaborative talks with OPEC.

The 10 OPEC members with production quotas have a current target of 23.2 million b/d. Last month, OPEC sales exceeded the target by 1.3 million b/d, or 5.6%.

Steensnæs said production on the Norwegian Continental Shelf has surpassed even the most optimistic prognosis made in the 1970s and 1980s.

"We expect the next 5 years to represent the peak of our oil production, but it is important to note that we see a significant potential for further production and developments. Norway has a potential for another 50 years of oil production, and gas for 100 years to come. In my opinion, the prospects are looking good for an industry many seem to think is in rapid decline."

Wilson used the conference to announce a joint working group to focus on future collaboration between the UK and Norway in the oil and gas sector.

Wilson said, "When I met with senior representatives of the oil and gas industry last month, I was encouraged by their positive comments on future collaboration with our Norwegian counterparts. As a result I asked my officials to initiate discussions with the Norwegian Ministry of Petroleum and Energy to set the ball rolling.

"The working group will consist of government and industry members and their Norwegian counterparts. We can learn much from each other's experiences of working in the North Sea, and I expect to see many positive recommendations for future cooperation."