Indeed other issues, if the current market levels are
comfortable to every one, the rising global inventory levels and the weakening
dollar continue to torment the producers and would definitely be weighing on
the minds of the ministers, yet the fact remains, and one could definitely
deduce from the noises preceding the meeting, that the issue of compliance
would get the top attention of the ministers in Vienna.
Some say that the currently strong oil prices might induce
OPEC to pump still more, helping to calm a rising market and limit damage to a
fragile economy, yet one thing remains an almost certainty that there would be
no announcement of any formal change in output during this week’s OPEC moot.
OPEC is contented. It has the satisfaction of playing its cards
well. OPEC Secretary General Abdalla El-Badri feels the decision to lower
output, some two years earlier was the best decision ever taken by OPEC.”
"This time OPEC played it right," an OPEC official
told Reuters while preparations for the meeting were in the final stages. And
OPEC definitely wants to stick with it. It doesn’t plan to tinker or interfere
with the current output quotas, OPEC President Wilson Pastor clarified, “There
are no plans to change OPEC policies regarding production or prices. The world
economy is growing, it’s exiting the recession and as the economy grows, that
will go hand in hand with robust growth in oil prices.”
"We have not seen a big demand for crude oil. For this
reason, we do not find any reason to reconsider the production levels for OPEC
at the next meeting," Iraqi Oil Minister Hussain Al-Shahristani was quoted
as saying. "We are calling on them to comply."
Kuwaiti Oil Minister Sheikh Ahmad Al-Abdullah Al-Sabah
earlier the week insisted on better compliance with output quotas too.
"Our main problem is the compliance. In the next meeting ... this will be
the main subject to be raised," he said."I'm not worried about
(softening) demand. I'm worried about the quotas ... OPEC (member states)
should be more committed to their quotas. There is a bit of slippage here and
there." OPEC would be comfortable with 75 percent to 85 percent
compliance, not the current level of 52 percent, he emphasized.
Al-Sabah also said OPEC was unlikely to change production
quotas at the next meeting in Vienna, as current oil prices were
"comfortable".
"Cutting production is out of the question as prices
are in the $70-$75 range and don't seem to be increasing," a Gulf source
was quoted as saying by Reuters, adding any output increase was also unnecessary.
Yet he underlined:"What we can ask for is better compliance from
countries."
In the meantime, interestingly, the non-OPEC Russia,
currently the world's biggest oil producer, has also indicated it would work
more closely with the Organization of Petroleum Exporting Countries. Addressing
a conference at the Black Sea resort of Sochi, Russian Prime Minister Vladimir
Putin said, "OPEC is sometimes irritated by us as we, not being a member
of the organization, produce more oil, which influences international crude oil
prices. But we will coordinate our work with OPEC," he said. He though did
not specify how Russia would collaborate or whether it planned to attend OPEC's
next meeting.
In past, OPEC ministers have voiced exasperation with Russia
as it has pumped to full capacity, while leaving the work of supporting oil
prices by reducing output to OPEC. It has sent high-level delegations to attend
OPEC meetings as observers while the oil prices were crashing to just above $30
a barrel in late 2008, but has not joined in with production cuts, despite
urgings by other fellow producers’. Instead, Russia's output has risen to
records of more than 10 million barrels per day, taking it above Saudi Arabia,
which is considerably producing below capacity following OPEC supply curbs.
And while the OPEC ministers discuss their current output
and market, the ministers could also be looking at closely, with keen interest
and indeed reservations, the recent announcement from Baghdad. Last week, the
Iraqi Oil Minister Hussain Al-Shahristani announced that Iraq’s 66 known oil
fields were now thought to contain 143 billion barrels of crude oil — an
increase of 24 percent on a previous estimate of 115 billion barrels.
New estimates at the giant West Qurna and Zubair fields
helped push the total figure to 143 billion barrels, he said. "The oil
reserve is for 66 discovered oil fields in Iraq, and there are many others that
have not been discovered yet," Al-Shahristani added. "It is expected
this figure will be increased when these oilfields are discovered.
And this carries quota implications too — though for the
time being it may not be up for discussion, it seems. "We will not discuss
the Iraqi (output) quota issue with OPEC now. This case has been delayed,"
Al-Shahristani clarified.
But the intentions are apparent. This is a move that is
aimed at bolstering its negotiating power within the OPEC, analysts clearly
feel. The game has begun. And it would be fun to keep a tab on it — from the
peripheries of course– one could say with some sort of conviction indeed.
