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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (12991)	10/26/1998 11:03:00 AM
From: Kerm Yerman	Read Replies (10) \| Respond to of 15196

OIL AND NATURAL GAS PRICING SCENE - PART 1 MONDAY AM 10/26/98 Ex-Saudi oil minister says $13-14 price reasonable ABU DHABI, Oct 25 - Former Saudi Oil Minister Sheikh Zaki Yamani said on Sunday he believed $13-14 per barrel could be a reasonable price for oil. He told journalists on the sidelines of a seminar on Caspian Sea oil resources in Abu Dhabi that prices were likely to remain low in 1999 due to an expected world economic slowdown. "Supply and demand must be the element that determines the true and just price of oil," Yamani said. "$13-14 per barrel could be a reasonable price with room for a margin of one to two dollars". A barrel of benchmark North Sea Brent crude for December delivery was quoted on Friday at $12.77, not far above the ten-year lows hit earlier this year. Oil generates some 80 percent of national revenues of most Gulf Arab states and make up about 90 percent of their exports, Bahrain's oil and industry minister said earlier this year. Yamani said Venezuela -- a member of the Organisation of Petroleum Exporting Countries -- was under pressure from oil companies not to honour its commitments to cut production. He said that if Venezuela reversed its decision, it could add some 500,000 barrels to the oil market in 1999. He said the oil cartel could collapse if Venezuela reneged on its oil cuts commitment, adding that Gulf Arab states could not defend oil prices alone unless they were willing to bear the costs of cutting output by some three million barrels. Venezuela's Energy and Mines Vice-Minister Dolores de Torres said on Tuesday that Venezuela had made no official agreement to extend oil cuts beyond June 1999, but did not rule out that such a decision could be taken in the future. Yamani said he did not expect the Gulf's share in the world market would be affected immediately by oil reserves in the Caspian, saying much investment was still needed to tap these resources. But he said that if oil prices were to rise, oil companies would be tempted to invest in countries which share the Caspian Sea basin. He estimated that these countries could add between six and seven million barrels of oil a day to world supplies. Kuwait calls for further cuts to boost oil prices KUWAIT CITY, Oct 25 - Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah said he would push for further oil production cuts to boost prices at an OPEC meeting next month, a newspaper said Sunday. "Don't ask me about expectations, ask me what I am going to do. I will push for further cuts in production to help increase oil prices," Al-Rai Al-Aam quoted the minister as saying at a dinner late Saturday. His comments came ahead of an Organisation of Oil Exporting Countries (OPEC) meeting in Vienna next month. Sheikh Saud did not specify the size of the cuts he would be pushing for. He warned that OPEC "will be in a dangerous position if it ignores compliance" with the 2.6 million barrels per day (bpd) of cuts already agreed by OPEC members. Earlier this month, the Kuwait oil minister said his country would not be held hostage to its commitment to cut oil production if others did not comply. "Kuwait refuses to become the victim of commitments to the agreements concluded last March and June," Sheikh Saud said. At Saturday's dinner he said contacts between OPEC member states will continue on the sidelines of an energy conference in South Africa which begins Wednesday. Kuwait supplies around 10 percent of the world's oil and has 100-year reserves at current production levels. The oil industry represents 90 percent of the Gulf state's exports. Oil ministers from Kuwait, Oman, Algeria, the United Arab Emirates and Iran met last month in Kuwait and warned that further cuts might be the only way to boost slumping oil prices, which have been hovering around 10-year lows. OPEC president Obeid ibn Saif al-Nasseri last week warned that oil producers will have to take "additional measures" to boost prices following the two rounds of output cuts so far this year. "The damaging effects of low prices on the income of producing nations have been very significant, and therefore, if this situation continues, they will be compelled to take additional measures at all levels," he said. OPEC decided in June to lower production by 1.37 million barrels per day (bpd), raising total cuts since March to 2.6 million bpd. Meanwhile, Sheikh Saud said that Kuwait is trying to "seek the assistance of international oil companies to develop our Kuwaiti oilfields." "However, please stay away from the word 'partnership,'" he stressed. Kuwait Oil Company has said that it plans to intensify cooperation with foreign oil companies to boost its production to three million barrels a day by 2005. In the past, Kuwait has expressed willingness to increase the role of Western oil companies. Kuwait's Supreme Petroleum Council approved foreign participation in principle in 1993, 1995 and 1997. Management consultants Coopers and Lybrand were hired to study proposals, due to be presented in October, clarifying the scale of oil companies' participation in local projects. Kuwait has so far limited foreign participation to technical assistance accords, such as with Total of France, British Petroleum and Chevron of the United States. Western firms would prefer lucrative production-sharing accords.