Badri urges OPEC to adhere to 30 million b/d ceiling
Vienna (Platts)--13Dec2012/857 am EST/1357 GMT
OPEC's decision to maintain an output ceiling of 30 million b/d means an
effective cut from actual production currently running above 31 million b/d
and will require members, except Iraq and Libya, to trim output, OPEC
Secretary General Abdalla el-Badri said Thursday.
"We decided to go back to the 30 million b/d and we asked member
countries to adhere to their designated number," Badri told reporters a day
after OPEC ministers agreed to roll over the 30 million b/d target.
Although both Iraq and Libya are included in the overall production
target, they are not being asked to scale back output as Libya restores
production to normal levels after last year's disruptive rebellion and while
Iraq is ramping up output to make up for years of output losses due to wars
Others will have to make way, he said, but stressed that OPEC had
decided not to order a formal production cut because of the fragile state of
the global economy.
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"...because of Iraq,, they are still progressing, we really cannot ask
them to adhere to the production allocation. That's why we are saying 30
million and we urge each member country to look at the members and try to
adhere," Badri said.
"The 12 member countries they should produce the total 30 million
barrels. Some countries have a quota, not really a quota, we don't agree with
this...[it's] a production allocation. Quota means that you have to produce
that number and a production allocation is really flexible."
Asked whether this meant that all members except Libya and Iraq have a
production allocation, Badri said: "Yes."
OPEC has not published individual allocations though Badri said that
each member country was aware of what he called their "flexible allocations"
under the agreement, that has been in place since December 2011 and was
renewed in June this year.
"Libya increased its production and some other countries must reduce it
because some countries picked up the Libyan production and now they have to
give it back to Libya... this is the understanding," Badri said.
But he added that the increase from Libya was expected to be no more
than 100,000 b/d, while Iraq was expected to add another 500,000 b/d on top
of the 500,000 b/d increase seen this year.
Iraqi oil minister Abdul Karim Al-Luaibi said in Vienna a day before the
OPEC meeting that production had gone beyond 3.4 million b/d. That puts Iraqi
output above the level that it was producing since shortly before the
invasion of Kuwait in August 1990, when Baghdad was placed under sanctions.
Iraq has since then been excluded from OPEC production quotas, that have
since been replaced by allocations.
But there was no discussion to give Iraq a production allocation at this
meeting, Badri said.
"We have not discussed the Iraq issue yet. We know Iraq is progressing.
They produced 500,000 b/d more last year and if they follow the same pattern,
then they will produce 500,000 b/d more this year but this question has not
been put on the table yet. But the production increases from Iraq are no
cause for concern because OPEC did not want to see prices go above their
current levels," Badri said.
"When you look at the price at the present time...$110, $107, $115,
there is no concern at this time...because the economic situation in the
whole world is really fragile...you have the United States, you have Europe
... China of course is progressing and India is progressing but the other
countries are facing difficulties and we ... want the boat to go steaming in
the ocean without any problems."
OPEC has no price target at which it would be prompted to act on supply,
Badri said when asked at which point the group might be inclined to trim
supply given that the demand for OPEC oil has been estimated at levels below
current production. "I cannot tell you this. We don't really have a target
for any price ... we are only concerned when things to to the two extremes.
We see it now at $110, $107, $112 and the world economy is fragile so we
don't want to make any disturbance to world supply," Badri said.
"We are concerned only when we see extremes, when the price is too high
or the price is too low. But if we continue to produce and there is a demand
for our oil with a reasonable price, then why not? We cannot cut production
with this price," Badri said.
--Edited by Jonathan Fox, email@example.com