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To: Crimson Ghost who wrote (35518)	1/21/1999 7:55:00 AM
From: Crimson Ghost	Respond to of 95453

No sign of restraint as US$5 oil looms (HL) Business Times OIL prices may plunge dramatically this year unless producers get their act together and they may well have to do so before the scheduled Organisation of Petroleum Exporting Countries (Opec) meeting on March 23. The Bahrain-based Oil and Gas News in its first weekly edition for 1999 declared in its front page a "US$5 per barrel alert!" to highlight the oil market distress, which has seen the North Sea benchmark Brent oil sinking to US$10.61 on Monday, a dollar above a 12-year low of US$9.55 struck on December 21, from about US$25.60 two years earlier. The bulletin quoted Kuwaiti Oil Minister Shaikh Saud Nasser Al Sabah as saying Opec could hold an emergency meeting to tackle the oil glut ahead of the scheduled March conference. Shaikh Saud said Opec might meet in February after Venezuelan President- Elect Hugo Chavez" new administration takes office. "Prices should reach their peak during the winter months, so imagine what they will be like in the spring and summer if they are at this level now," he said. United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri had said at the weekend he believed prices would rise in the second half of 1999 because of existing output cuts. However, he also warned that a collapse in the agreement by Opec and non-Opec members on production restraint could plunge prices below US$5 a barrel. The problem of unwanted oil, thanks to a mild winter in key northern hemisphere heating oil markets, is compounded by Opec output indiscipline and a worsening global demand outlook for 1999 due to the Asian crisis. The cartel raised production by 50,000 barrels per day (bpd) to 27.61 million bpd in December from the previous month. The output level showed a fall in compliance with an agreed 2.6 million bpd production cut pledge to an average of 67 per cent in December, from 73 per cent in November and 93 per cent in October. There is also the prospect of Iraq being allowed to pump more oil. Iraq said on Sunday it was holding a dialogue with some governments which have suggested easing eight-year-old UN sanctions, imposed after the 1990 invasion of Kuwait. Yet, Kuwait plans to open its northern oil fields to international oil firms which could invest some US$7 billion to double their production to 900,000 barrels per day (bpd). However, Shaikh Saud had stressed to the country's parliament that he would not forge production sharing deals but instead opt to have operating services agreements based on cash incentives. "The purpose is to concentrate on these northern fields to double their production from a current 450,000 bpd depending on the technology used," he said. In the meantime, most of the short-term pressure faced by the market stems from industry scepticism that Opec would hold an emergency meeting ahead of its March gathering. The Middle East Economic Survey newsletter had said top producers including Saudi Arabia and Venezuela "are unfavourable towards any hasty initiative on this front in current circumstances." "They feel firstly, that it would be dangerously counter-productive to hold an extraordinary Opec meeting in the absence of full prior agreement on fresh production cuts," the Cyprus-based newsletter said. Iran's non-compliance with existing production cut pledges was a major factor, it added. Iran continues to insist the baseline for its pledged 305,000 bpd cut should be 3.925 million bpd rather than the Opec-stipulated 3.623 million bpd. Teheran has said it would back any new moves to rescue the oil market but warned that some fellow Opec producers were using its demands to mask other problems in the cartel. Iran's Opec Governor Hossein Kazempour Ardebili said Iran was being used as a scapegoat by other Opec members to cover up a bitter battle for market share at a time of high oil supplies and eroding demand because of the Asian financial crisis. Opec President Youcef Yousfi has been consulting with Opec ministers on the oil market situation. (Copyright 1999) _____via IntellX_____ Publication Date: January 21, 1999 Powered by NewsReal's IndustryWatch ...back to top