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OPEC Delays Session a Day; Little Evidence of Accord

March 18, 1986|DON COOK | Times Staff Writer

GENEVA — After a first round of discussions on how to reverse the plunge in the price of oil, the 13-member Organization of Petroleum Exporting Countries suspended its emergency meeting Monday to allow time for bilateral talks among delegates and the issuance of a special report by a panel of experts.

Venezuelan Oil Minister Arturo Hernandez Grisanti, the group's current president, declared that he was "confident we can advance to concrete positions" on the question of setting new oil production ceilings. But there was little hard evidence of real progress toward an agreement, and Grisanti acknowledged that "no concrete proposals" had yet been discussed by the delegates.

Instead, after a three-hour meeting Monday morning, they convened a committee of experts to spend the rest of the day forecasting the world oil supply-and-demand situation for the rest of 1986 and then to report back to the full conference this morning.

Some of the delegates expressed doubt as to the necessity for the committee study, especially since OPEC's special marketing committee had already covered much the same ground in a report given to the oil ministers when they arrived here Saturday.

Stalling Tactic

One source, requesting anonymity, said the request for a new report was a stalling tactic that demonstrated the sharp divisions within the cartel, the Associated Press reported.

Questioned on the matter, Grisanti said: "Maybe, if we can have more experts' reports, we can have better decisions."

Meanwhile, he said, delegates would confer extensively and informally for the rest of the day and, no doubt, overnight in the bargaining process that is inevitably part of every OPEC meeting.

In trying to reverse the dramatic decline in oil prices paid to OPEC producers, the cartel last December abandoned efforts to enforce output and pricing controls among its members and declared open war against outside producers to regain a "fair share" of the oil market. The main thrust of that strategy has been to try to force non-OPEC oil-producing nations such as Britain to cut production.

The strategy so far has succeeded only in cutting oil prices in half, to about $15 a barrel.

One cartel faction, led by Iran, Algeria and Libya, wants OPEC to abandon its price war with the non-OPEC producers. This faction wants OPEC to cut production steeply, to 12 million barrels a day or less, in order to end the world oil supply glut.

Producing One-Third of World Supply

The Iranian-led faction is opposed by a Saudi Arabian-led group that wants to continue the price war in hopes of forcing Britain and others into accepting production cuts.

OPEC currently is producing about 17 million barrels a day, or about one-third of the world market. The other two-thirds comes from non-OPEC countries led by the Soviet Union, the United States, Britain, Mexico, China and Norway.

Egyptian Oil Minister Abdel-Hadi Kandil, whose country is not an OPEC member, arrived in Geneva on Monday to begin preparations for a separate meeting on Wednesday that several non-OPEC nations will be holding with OPEC after its deliberations have ended. Mexico, Oman and Angola are also to be represented.

Kandil told a news conference that "our target is the same--to stabilize the market," but he was critical of OPEC for having brought on the present price collapse by disregarding its own production ceilings and embarking on price deals, in particular "net-back" arrangements such as Saudi Arabia has negotiated with several major oil companies.

Under net-back selling, the oil companies pay for the crude oil not at an agreed price per barrel but on the basis of what the crude will market for after it is refined and sold as gasoline or heating oil or in petrochemical production.

Without mentioning Saudi Arabia by name, Kandil said the outcome of the meeting here depends on whether "someone is still working to push the oil price down."

Last year, OPEC production was being held to about 16 million barrels a day before the organization broke its own quotas and lifted production to about 18.5 million barrels a day.

Asked if Egypt was ready to cut production, Kandil said that he would listen to what OPEC had to propose and that "solutions will be done jointly." However, he added, Egypt has already cut its output by up to 200,000 barrels a day. "I cannot fill the needs of my country for export earnings today, and anything that improves on price will be welcome."

The Egyptian official also differed sharply with Saudi Arabia's oil minister, Sheik Ahmed Zaki Yamani, about the importance of Britain and its North Sea oil in stabilizing the present situation. He pointed out that the British oil companies are entirely private and that it is therefore impossible for the British government to play a role in any deal with OPEC on either price or production. Perhaps Yamani "does not understand" this, he said.

Yamani has contended that, unless North Sea oil is brought into some kind of a deal on new production ceilings, any arrangement will be unstable and unworkable.

OPEC's members are Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

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