ENERGY: OPEC May Freeze Output Ceiling Figures for Six Months

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IPS Correspondents

AMSTERDAM, Nov 18 1994 (IPS) - Member state ministers of the Organisation of Petroleum Exporting Countries (OPEC), meeting in Bali, Indonesia on Monday are expected to agree to hold maximum output ceiling targets steady for 1995.

Former OPEC secretary-general Subroto said this week that a one- year extension of the group’s current 24.52 million barrels per day (bpd) ceiling remained a possibility and would help oil prices.

The steady-as-she-goes policy is almost certain to be tabled and passed for the first six months of 1995, say analysts here.

Saudi Arabia, Venezuela, Nigeria and most OPEC Gulf states are pushing for at six months rollover at least. Iran, OPEC’s second- biggest producer, wants a three month freeze and a review in April with a possible cut in the second quarter when demand falls as summer approaches.

But few OPEC states see any point to hiking output as long prices stay relatively weak, even though oil demand is still rising sharply, up by 1.5 percent during in 1994. The prospect of a return to production of embargoed Iraq during 1995 also deters change.

The group meets in Bali from Monday, Nov. 21, with its reference basket of seven crudes holding at 16.97 dollars a barrel at the end of last week, well below the long term target price of 21 dollars.

“If you approach it rationally, a one-year ceiling would be the best option,” Subroto told reporters in Indonesia this week. “Some members favour that,” he added.

Subroto said demand for OPEC oil should average between 25.2 million bpd and 25.3 million bpd during 1995. Holding production should stabilise prices and permit a more detailed analysis of options in the mid-year, he added.

The average demand on OPEC for the year as a whole stands at 24.87 million bpd, 20,000 bpd higher than last month’s estimate, but 650,000 bpd above the average for 1993, reported OPEC’s Energy Studies Department monthly market report, out this week.

The Monday meeting is not expected to change prices much. “OPEC is not the maverick of days-gone-by,” said a Rotterdam analyst. “It is a responsible organisation run by responsible adults. Traders can plan ahead for things like a six month rollover.”