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To: The Perfect Hedge who wrote (17089)	3/29/1998 5:19:00 PM
From: Carmine Cammarosano	Respond to of 95453

OPEC Gathers To Attack Petroleum Glut By Richard Mably VIENNA, Austria (Reuters) - OPEC oil ministers were arriving on Sunday to seal a historic pact with other producers to cut petroleum output and ratchet up prices after a long slump. An emergency meeting of the cartel on Monday is expected to approve its hefty contribution to a reduction of around 2.3 percent in global output to mop up a big glut in supply. Venezuela bolstered delegates' pre-conference soundings by confirming it had already started to turn down the taps, predicting a further price boost when buyers detected the barrels were not for sale. "OPEC has returned to its very important role," Venezuelan Energy and Mines Minister Erwin Arrieta said, adding this was "to strengthen OPEC to be a powerful organization." Other major non-cartel producers have taken the rare step of joining hands with OPEC in pledging cuts of 170,000 barrels per day (bpd) on top of OPEC's 1.25 million bpd reduction. The price slide has cost oil-dependent OPEC members billions of dollars in revenue, hit share values of oil majors and placed a question mark over plans to explore and develop in the world's remoter petroleum regions. Non-OPEC Norway is due to announce its contribution this week, further boosting the price of the lifeblood of industrial economies from 25-year lows in real terms earlier this year. The agreement with non-OPEC powers, if it sticks, would mark a hefty expansion of influence for the group founded in 1960 to protect the interests of producers of the world's most important strategic traded item. The pact agreed by Saudi Arabia, Venezuela and non-OPEC Mexico in Riyadh on March 22 has drawn support from all 11 OPEC members bar Iraq plus Oman, Egypt and Yemen. Prices have gained $2 a barrel since the accord came to light and are $3.50 up from lows seen earlier this month, taking North Sea Brent blend to $15.40 . Memories are still raw of previous conferences that degenerated into public rows over production policy, and OPEC watchers say the fractious cartel should take care not to stampede jittery markets into a price slide. Delegates said the single biggest hurdle to the meeting's success lay in uncertainty over plans by OPEC heavyweight Iran and economically-troubled Indonesia to lower their production. Murmurs of discontent have already been heard over their stated intention to cut from their official OPEC output quotas, not from actual production as is assumed under the pact. The issue is central because these countries can produce only markedly below quotas established last December and so their announced "reductions" would not affect crude supply. Iran is expected to take issue with the industry consensus about its performance and argue that it is actually producing at quota and should cut from that level. Other producers could point out that Iranian officials had earlier this year confirmed their country actually produced 200,000 bpd below its quota. OPEC kingpin Saudi Arabia has made clear commitments under the accord were from current supply levels, rather than quotas. Saudi Oil Minister Ali al-Naimi made no comment on arrival. But one pointer to harmony at the talks was the willingness of Saudi Arabia and Venezuela to bury a dispute over policy and shape the ground-breaking agreement in alliance with Mexico. Saudi Arabia, the world's largest producer and exporter, had called for output discipline to support prices while Venezuela had pumped at capacity to maximize market share. Kuwait's new oil minister Sheikh Saud Nasser al-Sabah said he hoped for larger cuts than those agreed but delegates said there was no sign that this was a realistic possibility.