REUTERS ARTICLE
FOCUS-Norway govt runs into opposition to oil cuts
By Terje Solsvik
OSLO, March 26 (Reuters) - Norway's minority government ran into shock opposition from parliament on Thursday when it said it wanted to join other oil producers in curbing output to push up sagging prices.
''A more stable price is an advantage both for producing and consuming countries,'' Oil and Energy Minister Marit Arnstad told a news conference.
She said the government was seeking a cut of between three and six percent in Norway's actual output. Norway, the second largest oil exporter in the world behind Saudi Arabia, pumps about 3.2 million barrels per day (bpd).
But a majority in the legislature came out against the proposal, for a cut of around 150,000 bpd, when she presented the plan to the foreign affairs committee. The government has just 42 of 165 seats in parliament.
''The government has been very clumsy,'' said Jan Tore Sanner of the opposition Conservative Party, which has 23 seats. ''We question if the situation is so dramatic to justify such big production cuts.''
Arnstad said: ''This is a suggestion and not a decision. We will have more consultations in the week to come.'' She added that the government would review the size of the proposed cuts.
Norway, which curbed output from 1986 to 1990 to help OPEC bolster weak prices, had previously declined to say whether it would back the planned reductions launched by Saudi Arabia, Venezuela and Mexico last weekend.
If cuts were made, Arnstad said a decree would be issued on Friday, April 3.
Prices on the NYMEX exchange in New York fell below $17 a barrel on an initial selloff after news that parliament was against the plan, falling 32 cents to $16.80 a barrel. The market had peaked at $17.19 on expectations that Norway would cut output.
Cuts pledged by other producers so far amount to 1.4 million bpd, including 1.25 from OPEC producers, from April 1 until the end of 1998. OPEC producers are to meet in Vienna on Monday to approve the deal to shrink a huge glut of crude.
''This an overreaction by the government,'' said Oyvind Vaksdal, of the opposition Progress Party, which has 25 seats in parliament.
''There has been a fall in oil prices but it has stabilised,'' he said. ''I think it's bad timing and that the government should await the OPEC meeting.''
Opposition parties suspect the government of seeking to use the cuts as a backdoor measure to achieve its policy of reducing the pace of exploitation of Norway's petroleum resources to safeguard the environment.
Norway ordered oil firms to curb output by 10 percent in 1986 when prices plunged. It gradually phased out the cuts until abandoning them in July 1990. Since then, it has rebuffed OPEC's suggestions of cooperation.
The Norwegian Petroleum Directorate (NPD) this week said it was revising downs its forecast for Norway's average oil in 1998.
The NPD said delays to new oil fields and technical problems at some installations meant crude production this year was unlikely to reach a forecast average of 3.6 million bpd. ^REUTERS@
13:50 03-26-98
Ron Clark |
