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Oil cartel set for new cut in production

Video by Florence VILLEMINOT , Axelle SIMON

Latest update : 2008-12-17

Plans by the Organization of Petroleum Exporting Countries (OPEC) for an output cut of two million barrels a day may count with the additional support of a Russian daily production cut of 320,000 barrels.

AFP - OPEC was set Wednesday to announce a significant cut in oil output as the cartel seeks to support plummeting crude prices and producers' incomes, while non-OPEC oil exporter Russia may also slice production.
  
The Organization of Petroleum Exporting Countries, whose 13 member nations together pump 40 percent of world oil, will announce an output cut of about two million barrels a day following a meeting in Oran, the Saudi oil minister said.

OPEC member Qatar meanwhile stressed ahead of the ministerial meet that the cartel needed the help of non-OPEC oil producers, notably Russia, to carry out the planned cut.
  
"OPEC alone cannot do everything," Qatar Oil Minister Abdulla al-Attiyah said on arriving in the Mediterranean port city of Oran.
  
"Really, I don't know how we can manage those two million (barrels). Maybe we (will) have the support of Russia and others."
  
OPEC would like to see non-members slash their oil production by between 500,000 and 600,000 barrels a day, OPEC Secretary General Abdalla Salem El-Badri said Tuesday. Such a reduction would bring the total cut to as much as 2.6 million barrels.
  
Russian Deputy Prime Minister Igor Sechin said late Tuesday that Russia may slash daily oil export by up to 320,000 barrels, on top of a similar cut made in November.
  
"If the current price situation continues, we do not exclude the possibility that cuts in export will also continue at the level of 300,000 to 320,000 barrels a day," Sechin told reporters in Algeria.
  
The organisation's official daily output target is 27.3 million barrels but analysts say it is producing slightly more than this as some members seek to boost income.
  
Several OPEC members heavily dependent on oil exports, notably Nigeria, Ecuador and Venezuela, are being squeezed financially after oil prices plummeted 70 percent from record highs of 147 dollars a barrel in July.
  
World oil prices plunged more than three dollars on Tuesday after OPEC revealed the likely size of its output cut this week before recovering to stand at about 45 dollars a barrel.
  
"There will be a cut of about two million barrels," Saudi Oil Minister Ali al-Nuaimi said on arriving in Oran on Tuesday.
  
"Supply is still somewhat in excess" of demand, he told reporters.
  
"Inventories are also higher than normal. To bring things in balance there will be a cut of about two million barrels."
  
OPEC kingpin Saudi Arabia rivals Russia, which is sending a delegation to the conference and has said it might join OPEC, as the world's largest oil producer.
  
OPEC officials acknowledge that they are in a tight spot as crude prices slide in the face of a global economic downturn that has sapped demand for energy in the industrialised world.
  
The organisation said in a report on Tuesday that "the growing imbalance on the oil market... presents a real challenge for all market participants and will be the main focus of discussion" at the Oran meeting.
  
OPEC president Chakib Khelil has said producers are "very pessimistic about demand" and that within the cartel there was unanimous support for an output cut.
  
The cartel is also struggling with high crude inventories held by consumer countries, which according to Khelil currently amount to 57 days of supply -- above the average 52 days seen during the past five years.
  
OPEC comprises Algeria, Angola, Ecuador, Iran, outgoing member Indonesia, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
  
Iraq is the only member without an output quota owing to persistent unrest in the country. 

Date created : 2008-12-17

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