Recently in OPEC Category

OPEC producer Venezuela has joined fellow member Nigeria in making a token cut in supply to stem falling oil prices.

OPEC spokesman Omar Farouk Ibrahim said that "Venezuela has formally informed the OPEC secretariat of its voluntary decision to cut production by 50,000 barrels per day" from its 2.5 million bpd output and an overall OPEC quota of 28 million bpd.

Nigeria said it will cut exports by 120,000 bpd. Analysts question whether Nigeria will make good on its supply cuts. They cite strong demand for the country's light, sweet crude that is rich in gasoline and heating oil.

Despite the news oil fell more than $1. This is because there is plenty of oil around at the moment and investors are waiting for evidence that actual cuts are being instigated.

"There is definitely no agreement -- whether formal or informal -- within OPEC to cut current production," an OPEC official said.

OPEC officials say that there are no plans for an emergency meeting but there are plans to meet face-to-face on December 14.

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Update

Key OPEC producers, including Saudi Arabia, have agreed unofficially to cut production to curb falling prices.

With oil falling toward $61 on robust US inventories ahead of the winter heating season, OPEC said that the price slide from summer peaks had gone as far as it should go.

US crude fell to US$61.01 per barrel, reversing the rebound from 6-month lows below US$60.
Easing Middle East tensions, ample fuel stocks and slowing US economic growth have resulted in the steepest decline in oil prices since the Gulf War, falling from July's high of US$78.40 a barrel.

OPEC President Edmund Daukoru said that the slide in prices was harmful for investments and that OPEC was already talking among itself about what needs to be done.

Industry analysts feel that if the price slide continues, OPEC might cut its quota.
It is expected that if prices fall below US$60, it would trigger OPEC action.

While OPEC has avoided setting a target oil price to defend, Saudi Oil Minister Ali al-Naimi said that prices were "reasonable" when they were above US$62 a barrel.

On the other hand, BP is adding to the downward pressure on prices by increasing production at its Prudhoe Bay Field. BP expects to hit 400,000 barrels a day by the weekend, just 50,000bpd below full capacity.US stocks stand at their highest level since January 1999. US stocks of distillates are projected to rise.

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With the OPEC keeping current production quotas steady and maintaining spare capacities of 2 million barrels a day added to US inventories hitting their highest levels since 1998, oil prices have dropped to below $66 a barrel.

Light sweet crude for October delivery fell by 60 cents to $65.65 a barrel on the Nymex.
In London, Brent crude fell to a five and a half month low at $64.64 a barrel.

Heating oil futures fell to $1.8240 a gallon while gasoline dropped almost a cent to $1.6000 a gallon. Natural gas prices fell by 35 cents.

Other factors playing in the price fall are BP PLC's announcement that Prudhoe Bay production could resume by the end of October and news of Iran's possible compliance with the UN Security Council demand to freeze enrichment.

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It is widely expected that the OPEC meeting in Vienna on Monday will call for production to remain at current levels. An $11 drop in prices since the Lebanon cease fire may encourage some to push for cuts further out.
OPEC production is at the highest level since 1979 to cushion against supply shocks. The Saudi-driven policy has succeeded with refiners storing away OPEC crude.
Though oil has dropped from record highs of $78.40, it is still above the $61 price at the start of the year and $20 at the start of 2002.
With the hurricane season and the end of winter still to get through there seems to be no reason for agressive calls for cutting oil production.

But some OPEC members are looking to 2007 when demand could drop sharply if independent producers bring on projects of new crude and slowing economic growth would furher erode demand for OPEC oil.
OPEC economists predict a drop of 800,000 bpd in the requirements for the group's oil.

OPEC's production ceiling was set at 28 million bpd and output this year has run just below the official limit with everyone of the 10 members save Saudi pumping flat out.
Riyadh pumping at about 9.2 million bpd holds most of OPEC's spare production capacity with more than 2 million bpd in reserve.

While the kingdom has supplied the customers with what they want, it has refused to discount barrels to force feed the market and depress prices.
Iran's deputy oil minister and oil minister said they expect OPEC to keep oil production steady when it meets to chart output policy. Their sentiments echoed those of Algerian Energy and Mines Minister.

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The Indonesian government might take over a huge natural gas field run by ExxonMobil Corp when its contract expires in January.
The Natuna D-alpha block contains about 70 percent carbon dioxide and is thus expensive to develop and difficult to sell. The field has around 222 trillion cubic feet of gas, of which 46 tcf is thought to be commercially recoverable.

Energy Ministers Purnomo told reporters that if ExxonMobil has no commitment to produce or sell gas, Indonesia will terminate the contract.

Indonesia amd ExxonMobil had signed an agreement in 1995 to invest $40 billion in the offshore gas project, however tapping the reserves has proved difficult. ExxonMobil said it was looking for buyers for gas from Natuna D-Alpha.

The gas in this field accounts for about 25 percent of Indonesia's total gas reserves of 182 tcf.

ExxonMobil has a 76 percent stake in D-Alpha with the remaining 24 percent with state energy firm Pertamina.

Indonesia is trying to phase out costly oil-fired power generation and uses more of its cleaner, cheaper natural gas domestically. The country is Asia Pacific's sole OPEC member with more gas than oil.

Exxon was engaged in a 5 year row with Pertamina over the operatorship of the $6.2 billion Cepu oilfield, which was recently resolved and has faced sporadic problems in the country.

A government move not to renew Exxon's contract will create uncertainties about doing business in Indonesia amongst foreign investors. Added to this are worries about Indonesia's legal system, labor and mining policies.

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With the Lebanon-Israel truce having been announced, the clean-up work on the oil spill off the Lebanese coast can finally get underway.
OPEC has pledged 200,000 USD from their humanitarian fund to assist in cleaning up 150 km of polluted shorelines. About from the 10,000-15,000 tons oil spilled from the Jiyeh power station.

The UN had previously sent to envoys to Syria to take stock of the situation and has now announced that an International Assistance Plan has been drawn up to help the Lebanese government in dealing with the environmental disaster.
Experts under the aegis of the Regional Marine Pollution Emergency Response Center for the Mediterranean Sea drafted the plan which will be presented for scrutiny on Thursday at Athens.

The fund pledged by OPEC will be channeled through the UN Office for the Coordination of Humanitarian Affairs and will be spent on essential supplies.

Previous efforts to clean up teh oil spill met with Israeli naval blockades. Lebanese Environment Minister said his country will sue Israel for "this terrible crime", but did not give any details nor has there been any follow up since his statement last week.

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In April, Iranian President Mahmoud Ahmadinejad, had suggested strengthening the OPEC fund to decrease the pressure of rising oil prices on poorer countries while ensuring that rich nations paid the full price.

Iran's oil ministry is now studying the presidential proposal to sell cheap crude to poor countries. However, the proposal would take some time to come through as parliamentary approval is required for any cuts in the crude export prices.

80 percent of Iran's export earnings are from energy exports.

Venezuelan President Hugo Chavez has been notching up cheap oil export deals around poor countries  in the Caribbean and Central America in a bid to counter US influence through cut-rate energy exports.

Ahmadinejad has formed a strong alliance with Hugo Chavez who strongly opposes the US Free Trade Area.

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In a TV program, Iran formally defied UN's nuclear resolution.

The UN Security Council had asked for Iran to stop enriching uranium but Iran is going to go ahead and increase its program.
Despite failure to secretly import uranium from the Congo, Iran plans to brazenly pursue its nuclear proliferation plans.
Ali Larijani said that all of Iran's nuclear technology will be expanded including the centrifuge cascades for uranium enrichment.
When questioned about the balance of power in the Middle East with fears of the region breaking into a wider war and apprehensions that Iran does not plan to use its enrichment program merely to power fuel stations but to make nuclear weapons, Iranian President declared that Iran has joined the club of nuclear countries.

Tehran assures that it would not like to use the oil weapon and that the measure is being forced upon them by the double standards of countries that allow nuclear technology to some and not to others.
Iran being OPEC's second largest oil exporter states it should be allowed to defend its rights in proportion to its stance.

It is to be noted that the elimination of nuclear weapons features no where in international plans.

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OPEC President Edmund Daukory says that oil prices will probably remain $70 a barrel till the end of 2006.

The oil cartel has enough spare capacity to keep the market supplied with crude and Daukoru claims that the international oil market was overreacting by keeping prices close to record level.
Keeping in mind the ongoing Lebanon crisis, start of hurricane season in the US, threat of inflation and the loss of sweet oil from Nigeria coveted by US refineries, the prices are unlikely to drop below $70 a barrel.

OPEC has the capacity to produce more than 2.5 million barrels a day if required, placing the cartel in a comfortable position.

Despite violence in the Middle East, OPEC has no plans of meeting prior to their scheduled meet in Vienna in September.
Daukoru claims that the present situation requires no OPEC emergency response.

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OPEC President Edmund Daukoru visited Tehran as the third stop on his tour of OPEC producers.

Daukoru was quick to state that the present state of oil prices was not the fault of OPEC but rather a result of political tensions and refining shortages.
He reiterated that OPEC has crude spare capacities of more than 2 million barrels a day if needed.

Daukoru has called the current nearly $80 a barrel price "very uncomfortable" and in looking to deal with the issue.

Iran as the second largest supplier has oil traders worried. Iran is in a position to cut supplies if a U.N resolution is passed against its nuclear work or even if Israel attacks Iran's ally Syria as a part of the present Lebanese offensive.

Daukoru is in Tehran also for the purpose of discussing the dissent between Iran and Kuwait over the OPEc secretary-general post which has seen several acting secretary-generals since December 2003 when the last term ended.

The selection process for the post often reveals the political divisions between core OPEC members.

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