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To: NucTrader who wrote (24266)	6/16/1998 10:26:00 PM
From: Captain James T. Kirk	Read Replies (1) \| Respond to of 95453

FOCUS-Venezuela suspects oil partners of cheating By Tom Ashby MARACAIBO, Venezuela, June 16 (Reuters) - Venezuela, for years accused of violating Organization For Petroleum Exporting Countries (OPEC) quotas, turned the tables on its partners Tuesday, accusing them of putting illicit barrels of oil on the world market. Luis Giusti, head of state oil company Petroleos de Venezuela (PDVSA), stopped short of naming a country, but said, ''What is certain is that there are volumes of crude oil being produced that we thought were not being produced because there was an agreement to cut them.'' In a secret meeting in Riyadh in March, Venezuela, Mexico and Saudi Arabia masterminded an agreement between OPEC and independent oil producers to slice about 1.5 million barrels per day (bpd) off global oil supplies to lift sagging prices. Giusti, speaking to journalists in Venezuela's western oil town of Maracaibo, said the pact should have cut the oversupply of oil in world markets to about 1.1 million bpd, the same level as 1997. But he added that the latest price falls indicated that oversupply was greater than that figure. ''Evidently prices are not reflecting that, so there is another factor that is not known by everybody at the moment,'' he said. Giusti reiterated that Venezuela was currently pumping 3.17 million bpd, exactly in line with its 200,000 bpd cut under the Riyadh agreement. A key advisor and member of Venezuela's Riyadh pact team, Alberto Quiros Corradi, said the violator could be Saudi Arabia. ''It would be a pity if after the strict compliance of the accord between OPEC and independent producers in April and May, one producer should disrespect their voluntary commitment,'' he was quoted as saying in local newspaper El Nacional Tuesday. He said ''secondary sources,'' which refers to independent analysts, showed extra cargoes coming from Saudi Arabia. Venezuela is the second-largest crude oil exporter in the world after Saudi Arabia, and competes with the Gulf giant for the world's largest market in the United States. Independent observers estimate that the oil producers which signed the Riyadh pact have only in fact cut output by about 900,000 bpd and that this was partly counteracted by a 300,000 bpd increase in exports from Iraq, the only OPEC member not included in the agreement. As prices continued to fall after the pact was implemented on April 1, the three countries agreed to a second round of cuts beginning July 1. Despite Venezuela's claim to have secured another 700,000 bpd of cuts worldwide, prices have plummeted another 23 percent since the second agreement on June 4, with benchmark crude oil West Texas Intermediate hitting a 12-year low Monday. Giusti said Venezuela's pledged 125,000 bpd extra reduction would still go ahead, ''but naturally I want to review the global situation next week,'' he told reporters. He will join OPEC ministers in Vienna June 24 for their regular ministerial meeting where they are expected to come up with a final figure for the second round of cuts. Venezuela was long a black sheep in the Gulf-dominated OPEC cartel, criticized by Middle East producers of agreeing to quotas at the ministerial meetings and then disregarding them. But Venezuela hailed a new world order with the Riyadh pact because it was based on actual production instead of the redundant quota system, and argued it vindicated Venezuela's claim to a higher share or world oil demand. Independent observers say Venezuela has been unusually compliant with the Riyadh pact cut while many question whether other members of the group, such as Mexico and Iran, have lived up to their pledges. --------------------------------------------------------------------------------