Oil minister trio starts Cancun meet to talk prices-PDVSA chief
biz.yahoo.com
Friday October 2, 12:30 pm Eastern Time
By Michael Christie
CANCUN, Mexico, Oct 2 (Reuters) - Oil ministers from the three countries that spearheaded groundbreaking attempts to boost world crude oil prices began talks in the Mexican resort of Cancun on Friday, saying they would analyze the world market and current price levels.
The talks between the oil ministers from Mexico, Venezuela and Saudi Arabia started on time at 10:00 a.m. local time (11:00 EDT/1500 GMT). All three ministers, before the meeting began, vigorously tried to downplay expectations for their third round of talks this year. Their previous two encounters in March and June led to historic agreements to cut production amid the lowest real-term oil prices since the early 1970s.
Luis Giusti, president of Venezuela's state-owned oil company Petroleos de Venezuela SA (PDVSA) and a delegate to the talks, said, ''We're just going to talk about prices,'' though he acknowledged it was likely they would talk about the duration of the current agreement and focus on next year.
''It's a very hot room up there and we're going to sweat it out,'' Giusti said.
Venezuela's oil minister Erwin Arrieta and Saudi Arabia's oil minister Ali al-Naimi went to the talks Friday morning without making comment.
The Saudis and the Venezuelans roared off in a convoy of Suburbans to the secluded government compound, which consisted of several luxury chalets with swimming pools and a private beach, protected from prying eyes by a beige wall and federal body guards. La Casa de Fonatur, the site of the talks, is a federal tourism compound reserved for high-ranking guests.
The heat on Friday in Cancun was so oppressive that dead snakes could be seen in the streets.
Officials involved with the Cancun oil talks said no further comments are expected until a news conference, which the three oil ministers have scheduled for 4 p.m. local time (5 p.m. EDT or 1700 EDT/2100 GMT) after the futures markets have closed in New York and London.
''That's the way the Mexicans wanted it,'' said a delegate, asking not to be named.
The three producers only issued statements after the two previous meetings and it will be a very rare press session on Friday afternoon for the Saudi minister.
On Thursday, Mexico's oil minister Luis Tellez and Venezuela's Arrieta both had reiterated that the Friday session will not focus on further commitments to cut production or exports.
''We don't need to discuss that now,'' Arrieta had said, after flying in from Caracas. He said the meeting's ''open agenda'' would mainly be an assessment of how the cuts agreed so far are working, as well as a broad range of other market issues.
Oil producers have been given some breathing room as prices have rebounded since a mid-June low, when New York crude futures hit $11.40 a barrel, to around $16 currently. At midday on Friday, the November crude oil futures contract on the New York Mercantile Exchange was trading at $15.44 a barrel, up a penny from Thursday's close.
The recovery has been partly credited to the earlier agreements, which led to pledges by producers from the Organization of Petroleum Exporting Countries and non-OPEC nations to cut 2.5 million barrels per day (bpd) from world supply.
However, many analysts have worried that the third-quarter rally in crude prices might be short-lived because of an expected slowdown by refiners in the U.S., Europe and Asia in the fourth quarter, coupled with the return of disrupted supply from Nigeria and the North Sea.
Speaking in Austin, Texas, at a joint press conference on Thursday with Texas Gov. George W. Bush, before flying to Cancun, Tellez had said: ''We will not be discussing further cutbacks,'' but added that ''we will be discussing how long we will keep the agreement, given that next year, world demand will not be increasing substantially due to volatility in international financial markets.''
A source close to the talks said there were murmurs that Saudi Arabia, the world's largest oil exporter, might look for assurances that the two Latin American producers would hold to current production levels through next year if necessary. In return, the Saudis, together with other Gulf producers, would bear the brunt of any further needed cutbacks.
''I've heard that mentioned, but I don't know if that is on the agenda for tomorrow,'' said one delegate, who wished to remain anonymous.
Arrieta said he had not heard of such a proposal, though he said he expected to hear from Saudi's Naimi about recent talks among Gulf producers, which focused on the possibility that the market could be in bad shape again in the early part of next year.
Further cuts would be very difficult for Venezuela and holding the current level won't be easy. It has accounted for the biggest percentage cut among the parties to this year's agreements and there is considerable domestic opposition to the policy in the lead-in to December's general election there.
Mexico has only agreed to make cuts to its exports, not its output, and has said it is committed to the cuts only until the end of this year, while other producers are signed up until the end of next June. Mexican officials say privately that the government is in a difficult position to make any decisions for next year until the 1999 budget has been drawn up. It is due to be presented to Congress in mid-November and should include estimated oil revenue for next year.
The Sphinx-like Naimi, the Alan Greenspan of the oil world, kept his own counsel and would not be drawn out on Friday's agenda, upon his arrival Thursday in Cancun.
''Oil prices rise and oil prices fall; don't worry about it,'' were his only initial comments. |
