opec head urges production cuts

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    Sunday, 2 November 2008

    Opec countries must implement agreed production cuts if they want stable oil prices, the cartel's head has warned.

    Saudi Arabia, the world's biggest oil exporter, would be key to the success of any cutbacks, said Chakib Khelil.

    Mr Khelil said markets were waiting for Opec countries to cut output, as agreed in Vienna last month.

    Meanwhile Russia has said it will cut its oil export duties, in order to help the country's oil producers cope with declining prices.

    Mr Khelil, who is also Algeria's energy and mines minister, told Algerian radio that if Saudi Arabia took its time in cutting production, oil prices could be affected.

    "I think that's what the market is waiting for now - to see that there really is a reduction in the market and not take at face value the declarations of the different deciders.

    "It's what is seen on the market that will affect prices."

    Mr Khelil made his remarks as UK Prime Minister Gordon Brown was on a tour of the Gulf, to ask states to do more to help tackle the global economic crisis. Mr Brown had criticised Opec's decision to cut production.

    The prime minister repeated his calls for a "stable" crude oil price on Sunday, citing the need for "a sustainable transition to a more low carbon emissions economy".

    Qatar's Energy Minister, Abdulla bin Hamad al-Attiyah, rejected criticism over the production cuts, saying there was a lot of oil which no-one was buying because of the economic conditions.

    Falling prices

    The Organization of the Petroleum Exporting Countries (Opec) decided at a meeting in Vienna on 24 October to cut production by 1.5m barrels a day - about 5% - in order to halt the slide in oil prices.

    Opec hopes its production cuts will lead to oil prices stabilising between $70 and $80 a barrel.

    Meanwhile, Russia's export tariff cut of $85 a tonne has disappointed oil producers, who were hoping for a larger reduction.

    "It was the minimum reduction and it does not significantly raise the appeal of exports," a source at one of Russia's oil companies said.

    The duty was set at $287 a tonne from 1 November, down from $372.20.

    Russia is the world's second-largest oil exporter, and it has been hit by falling prices. Exporters have held back oil, that would otherwise have been sold abroad.

    Russia's oil export tariffs - or taxes - have been a significant part of government revenue in recent years helped by booming oil prices.

    It has said it would not join Opec countries' efforts to bolster prices by cutting production, but has said it would like closer ties with the cartel and more influence on prices.


 
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