OPEC Committee Steps Up Talks on Setting Oil Quotas

A special OPEC committee on Friday held intensive consultations on setting lower production quotas to boost sagging oil prices. It was expected to report to the ministerial conference today.

Such a binding agreement is widely believed to be OPEC’s only long-term means of shoring up oil prices, which have dropped to levels between $7.35 and $12--or less for some grades--from $32 per 42-gallon barrel last November.

If there is no immediate agreement on quotas, oil ministers of the 13-nation Organization of Petroleum Exporting Countries have already decided to attempt an overall voluntary cut of nearly 10% of its current output.

The ministers postponed Friday’s scheduled full session until today, when they will learn whether the committee had made any progress, OPEC spokesman James Audu said.

Audu declined to say if the committee was making any headway in the difficult negotiations over quotas. He said the five-man committee was continuing to meet individually with ministers in an attempt to forge a binding accord on lower quotas under guidelines set by a compromise Algerian proposal.

United Arab Emirates Oil Minister Mana Said Oteiba said Friday that he is “not that optimistic” that OPEC ministers will be able to overcome obstacles to setting new formal national oil output quotas at the cartel’s current meeting.

Iraq Oil Minister Kassim Ahmed Taki confirmed that the committee had excluded Iran and Iraq from its deliberations on quotas. The two warring rivals are completely at odds over quotas, and Taki reiterated that Iraq was not willing to compromise.

Taki said, however, that he had met with the committee and that he had suggested that under new quotas, OPEC should reduce its aggregate daily output to “12 (million) to 15 million barrels a day,” excluding Iraq and Iran.

OPEC’s current daily production is about 20 million to 20.5 million barrels, according to various industry estimates.

Oteiba said he is not optimistic that OPEC ministers will be able to overcome obstacles to setting new national oil output quotas at the current meeting. Asked if he thought it may take several months to reach agreement on quotas, Oteiba replied: “Maybe more.” And he said “maybe” when asked if the current meeting will adjourn without an agreement on formal quotas.

Oteiba also said the oil ministers were likely to call another meeting “maybe in October.”

Conference sources had indicated earlier that OPEC would be likely to meet in about two months, as the proposed voluntary cuts--if accomplished--would expire at that time.

Algerian Oil Minister Belkacem Nabi said the new quota committee had been expanded to include oil ministers from Kuwait and Ecuador in addition to ministers from Indonesia, Nigeria and Algeria.

Nigerian Oil Minister Rilwanu Lukman is OPEC’s president, and individual ministers and their aides streamed in and out of his hotel suite throughout the day.

Lukman announced Thursday that nine or 10 OPEC countries that had pledged voluntary cutbacks in production would lower their respective outputs immediately if the current ministerial conference fails to agree on set national quotas.