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To: JoeDi1213 who wrote (49399)	8/17/1999 9:06:00 AM
From: Tomas	Respond to of 95453

"Are oil companies restraining output at all or are they simply unable to produce the forecast?" INTERVIEW - Norway says oil cuts should stay for now By Tanya Pang OSLO, Aug 17 (Reuters) - Norway said on Tuesday that cuts to oil output by OPEC and some non-OPEC producing countries should remain in place ``for the time being' despite higher oil prices. ``Definitely,' said Tore Sandvold, Director General of the Norwegian Oil and Energy Ministry, when asked if the cuts should stay in place. ``One of the main reasons we are in this situation is the discipline in OPEC and some non-OPEC countries to contain their production,' Sandvold told Reuters in an interview. ``I think market fundamentals of demand and supply are still in a state where these (cuts) are needed for the time being to have reasonable prices.' Last year, non-OPEC Norway said it would restrain output by 200,000 barrels per day (bpd) in 1999 in a bid to help push up record low prices. So far this year, however, Norwegian production has fallen below forecasts of 2.9 million bpd, including the self-imposed cut. According to the Norwegian Petroleum Directorate, production averaged 2.756 million bpd in the first six months. Some analysts wonder whether oil companies are restraining output at all or are simply unable to produce the forecast. Since late 1998, prices of benchmark Brent crude have more than doubled to above $20 a barrel. Sandvold said that despite the shortfall, production figures over the full period of the cuts, until January 1, 2000, would show that Norway had turned down the taps. ``We decided to reduce our production up until January 1 and if you take that time horizon you will see that we have cut production,' he said. ``Production over the year would have been higher (without the cuts) than it will be, that is the point.' Sandvold reiterated that Norwegian output this year had so far fallen below forecasts because of delays to new projects and technical problems at some fields. He said the ministry was currently assessing whether Norway could meet an original forecast of 3.5 million bpd for production in 2000. "It (3.5 million bpd) was realistic in the sense that it was the figure put in the revised budget. I cannot say yet what the figure will be in the new national budget, we are going through the figures now for production, investment etc. ``In this process we have to make up our minds whether 3.5 is still a realistic figure or not,' Sandvold said. He said there had been a drop in activity on the Norwegian continental shelf (NCS) following the collapse in oil prices last year, but he now had ``the feeling that the mood is shifting again and they (oil companies) are getting more optimistic.' He said that he was not concerned about the level of development activity and did ``not necessarily' believe that the boom period for the NCS was over. ``We will still have a lot of activity for many years to come. Maybe not as high as last year but continuing,' he said. Norway is currently preparing to hold a 16th concession round for new licences, which is due to be awarded next year. Sandvold said there ``is a lot of interest from oil companies to explore this area.' He said that it appeared that the period of increased costs and overruns had come to an end, but Norway needed to continue to work to ensure its competitiveness. There were no plans, however, to change the current tax regime in the petroleum sector, he said. ``We are not desperately willing to reduce our taxes in the situation where (crude) prices are high and interest to continue to explore in Norway is quite high,' Sandvoll said. ``I don't see any reason to change the tax situation now.' biz.yahoo.com