OPEC Wrestles With Tough Questions : Vienna Meeting Crucial to Group’s Survival, Chairman Says

OPEC Chairman Rilwanu Lukman of Nigeria predicted Tuesday that the cartel’s upcoming meeting in Vienna next month is going to be a tough one as the group deliberates questions of pricing and independent auditing of members’ production.

Lukman made his forecast about the meeting, set to begin Dec. 9, after he met with Indonesian President Suharto.

“We have a lot of problems that we have to consider in December, which are crucial for the survival of OPEC members,” Lukman said.

He leads a committee rallying support for discipline in OPEC’s restive ranks, plagued by overproduction, conflict in the Middle East and differences over price strategy.

“We don’t expect the next conference to be easy,” the Nigerian oil minister told a news conference later. “There are very difficult questions to deliberate. It could take a long time.

“Obviously there is a difference of opinion within OPEC as to what price level we should aim at in 1988. Some people want to maintain the current level of $18, some want an increase to compensate for the decrease in the dollar.”

Lukman said an independent auditing system of members’ production has been discussed with heads of state.

“Most interesting, of course, is the independent auditing of production,” he said. “We will have to see if it is acceptable to all members. So far no one has objected to the idea.”

Lukman said calculating oil demand in 1988 was subject to unknown variables, such as the effect of the stock market crash on the economies of industrialized countries. Demand for OPEC oil could be similar to 1987, he said, at around 17.5 million to 18 million barrels a day. OPEC’s output agreement for the second half of 1987 is 16.6 million barrels per day, although production has been above that level.

Lukman said ultimately OPEC wants to maintain the competitiveness of oil against other energy sources.

“Our long-term strategy is to keep the price of oil at such a level that it would encourage people to use more oil necessities and discourage the development of very expensive oil such as in the North Sea and the Alaskan area,” he said.

Lukman’s fellow ministers on the committee are Indonesian Mines and Energy Minister Subroto and Venezuelan Energy and Mines Minister Arturo Hernandez Grisanti.

The three have already been to the Gulf states, Ecuador, Venezuela, Libya and Algeria, and will visit Gabon and Nigeria before the full conference begins in Vienna.

Meanwhile Norway, Europe’s third-largest oil producer, plans to continue trimming production from its North Sea fields in order to support OPEC efforts to control supply.

Oil and Energy Minister Arne Oeien said in an interview: “If OPEC stabilizes prices at around $18 to $19 a barrel, I see no reason why Norway would change its policy.”

Norway is not an OPEC member but depends heavily on oil revenue.

Separately, oil prices fell sharply in New York on Tuesday as traders grew increasingly pessimistic about OPEC’s production and pricing levels.

The December contract for West Texas Intermediate, the benchmark grade of U.S. crude oil, fell 25 cents to $18.40 per 42-gallon barrel on the New York Mercantile Exchange after slipping 28 cents on Monday.