OPEC Ministers Seek Accord on Output Quotas : Yamani Wants Meeting With Britain and Norway

In a grim atmosphere of crisis, oil ministers of the 13 member nations of the Organization of Petroleum Exporting Countries met for three hours here Sunday and agreed to try to hammer out in the next two days a new accord to cut their production to try to check the plunge in world oil prices.

They acted after a warning by Saudi Arabian Oil Minister Ahmed Zaki Yamani that oil could now fall to $8 per barrel if non-OPEC producers--in particular, Britain and Norway--do not join OPEC in cutting production to bring the market back under control.

Behind closed doors on the 17th floor of the Intercontinental Hotel in Geneva, Yamani then made an urgent appeal to the other OPEC ministers that they close ranks in the next two days, agree on new production quotas and stick to the agreement.

Non-OPEC Producers

Then, he said, they should seek to bring in the non-OPEC producers, first with a meeting here on Wednesday and then perhaps with a further meeting in London as soon as the British and Norwegians are willing to talk.

Mexico, Egypt, Oman and Angola--all non-OPEC members--have already agreed to be here on Wednesday to discuss the results of the OPEC deliberations.

Although Yamani gave no indication at the meeting about what Saudi Arabia might be prepared to do in cutting back its own production, which is a major factor in the picture, there was a clear implication in his remarks that he is ready to move.

Meanwhile, the only two members that directly stated their readiness for production cuts in Sunday’s preliminary discussion were Kuwait and Ecuador.

Warning of More Price Slides

Yamani’s warning that oil could yet plunge to $8 per barrel came in an interview that he gave to the London Sunday Telegraph.

In the interview, he told the British that “disaster lies ahead for you, for which your country would bear the lion’s share of the blame.”

“In your own North Sea, output is declining by 20% a year,” Yamani said. “Some fields in the United States are starting to close down with a loss already of 1.8 million barrels a day, lost forever as are some in Canada. Some bigger Texas fields are shutting down. And at current oil prices, which have gone down by half over the last few months, there will be a question mark over several smaller companies by the end of the summer.

“The best and only way to ward this off is for the non-OPEC producers--and, above all, Britain and Norway--to cooperate in price controls,” he continued. “Neither is coming to Geneva, but I do not despair of getting some talks going afterwards, perhaps in London. You must invest and not just extract at any price. I tell you--if you do not take the decision, nature will take it for you.”

All of the OPEC ministers arrived in Geneva wanting to see action to push oil prices back up. But the decisive question hanging over the meeting is whether they can agree, first, on what constitutes “a fair share” of the world oil market for OPEC and then, within that figure, go forward to an agreement on reduced production quotas that each OPEC member will rigidly enforce.

Oil analysts at the International Energy Agency in Paris agree that, if OPEC could now limit its production to 14 or 15 million barrels per day, as opposed to about 18 million that it is currently producing, then the market price would probably start back up in two or three months.

Yet, despite Yamani’s warnings and appeal, there is little confidence in the oil markets that OPEC can reach such an agreement and make it stick. The next two days will be crucial.