OPEC Meets, With Main Goal to Bring Iraq Into Line : Cartel Seeks Baghdad’s Adherence to Quota System in Bid to Cut Oil Output, Raise Price

The Organization of Petroleum Exporting Countries, its credibility in tatters, convened another meeting Saturday and declared its top priority to be the return of Iraq to the cartel’s quota system.

Only then, said OPEC President Rilwanu Lukman of Nigeria, can other members be expected to respect their assigned quotas and other oil-exporting nations be counted on to follow through on pledges to cut production in support of OPEC.

The goal is to trim production so that the world oil glut is diminished and oil prices can be raised. OPEC’s lack of control over markets has forced it to unofficially abandon its official $18-per-barrel price in favor of prevailing prices in the $14-to-$17 range. Just 2 1/2 years ago, oil brought $30 per barrel.

No Change in Positions

But despite efforts to bring the cartel’s second biggest producer back into the fold, there appeared to be no change in the public positions staked out by the various OPEC members that led to Iraq’s estrangement in December, 1986.

Iraq demands that it be allowed to export the same amount of crude oil as its war foe, Iran. Its assigned quota is just 1.5 million barrels a day compared to Iran’s 2.4 million barrels.

Rejecting this disparity, Iraq instead has been producing all it can, currently estimated at 2.6 million barrels a day and scheduled to rise sharply as new pipelines are completed next year. Even though Iraq’s demand for production parity with Iran would mean a cut in Iraqi production--and thus less oil revenue to fund its side of the war--Iran opposes parity on principle.

Not only is Iraq producing oil at will, but fellow OPEC members Saudi Arabia and Kuwait are effectively giving Iraq 400,000 barrels per day of crude produced in the so-called Neutral Zone between the two countries--production that is exempt from the cartel’s oil quotas.

Terms of Compromise

A compromise would subject the Neutral Zone oil to the quotas while giving Iraq its 2.4-million-barrel parity--an effective cut of 600,000 barrels a day from OPEC production--but then increase each country’s allotted production enough to keep the total cartel output at current levels.

By parceling out the production differently and returning Iraq to the quota system, OPEC would ease hard feelings over Iraq and presumably attract support from a group of six non-OPEC nations, led by Mexico, which recently offered to cut its production if OPEC would do the same.

“I appeal to you to sink our differences at this present meeting for the sake of consensus,” Lukman said in a speech opening the mid-year meeting. “Once we have arrived at a consensus among ourselves, we shall then be in a powerful position to reach out to those supportive non-OPEC oil producers who have offered to cooperate with us. . . .”

No Sign of Gaps Closing

However, there was little outward sign that the OPEC factions have closed the many gaps between them. They include the ravenous appetite for oil revenue created by the Iran-Iraq War, and the divergence in need represented by the comfortable Saudis and the more heavily populated and less wealthy OPEC members such as Nigeria, Venezuela and Indonesia.

With serious talks to begin today, the Venezuelans were demanding a cut in production, the Saudis were calling for an increase in production, Iraq was ruling out compromise with Iran and the Iranians were refusing to budge on the issue of parity with Iraq.

Said Arturo Hernandez Grisanti, the oil minister from Venezuela, “I’m not sure we will be able to finish all the issues.”