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Committee Will Urge Halt to Production Quota 'Cheating' : OPEC Group to Visit All Members

September 11, 1987|Associated Press

VIENNA — OPEC announced Thursday that a committee of three oil ministers would visit all 13 member countries in an attempt to halt excess oil production that has been pushing down prices.

The decision was announced after an emergency meeting of oil ministers from five members of the Organization of Petroleum Exporting Countries.

The session had been called in response to reports that most OPEC members were cheating on national oil production quotas set in June as a means of holding its official oil prices at an average of $18 per 42-gallon barrel.

James Audu, an OPEC spokesman, said the five ministers would meet again briefly today to set the timetable and determine the order of the visits.

On the New York Mercantile Exchange, October contracts for West Texas Intermediate, the benchmark U.S. crude, rose 29 cents to settle at $19.67 a barrel. Analysts disagreed on whether the Vienna meeting had any effect on prices.

Audu said the five-man committee planned no other measures to deal with the excess oil production, which the International Energy Agency reported earlier this week was about 15% higher than OPEC had planned.

Iranians Held Talks

The three ministers selected to tour OPEC capitals were Arturo Hernandez Grisanti of Venezuela, Subroto of Indonesia and Rilwanu Lukman of Nigeria, the OPEC president.

Those three, plus the oil ministers of Saudi Arabia and Algeria, were involved in Thursday's meeting.

An Iranian oil delegation was in Vienna on Thursday, but it did not participate in the formal conference because it is not a committee member. The deputy Iranian oil minister, Hossein Kazempour Ardabili, held informal talks with Lukman before the committee's session.

Afterward, he said Iran wanted Saudi Arabia to play the role of "swing producer"--cutting its oil production when world supplies were too great, in order to shield OPEC from a major decline in oil prices.

The Iranian oil minister also told reporters that Saudi Arabia should put pressure on its Persian Gulf allies Kuwait and the United Arab Emirates, plus Iranian war rival Iraq, to reduce their oil production.

Kuwait and the UAE are widely reported to be exceeding their OPEC-decreed production quotas, although neither has acknowledged this. Iraq never signed the OPEC quota accord, which it claims is biased in favor of Iran.

Some Action Needed

Ardabili said he would not meet with any members of the Saudi delegation. Diplomatic relations between Iran and Saudi Arabia have been at a low ebb since summer riots in the Moslem holy city of Mecca between Saudi police and Iranian pilgrims that claimed about 400 lives.

Audu said that while no cartel members would be singled out as violators of OPEC's production-sharing system, Thursday's meeting had determined that action was needed to ease downward pressure on oil prices.

"The meeting has accepted that there is some overproduction in the market, and has discussed ways of stemming this because it has got the result of pressurizing the price structure," Audu told reporters.

Audu said OPEC would issue an official proclamation on the production problem today.

OPEC decided in June to limit its production to 16.6 million barrels a day through the end of the year in order to balance the world oil market. Actual output was believed to be as much as 19.7 million barrels a day in August.

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