Iran Offers Ideas to End OPEC Deadlock : Talks Extended to Take Up Proposal That Favors Big Producers

OPEC oil ministers Tuesday extended their talks to a fifth day after Iran put up surprise proposals to end a deadlock on assigning production quotas among its members.

Delegates of Iran told lobby reporters that higher world petroleum prices was one goal.

The 13 ministers of the Organization of Petroleum Exporting Countries have been stymied for four days trying to agree on output quotas to remove excess supply from the world market.

Iran’s initiative led to a full session of the conference due Tuesday night to be put off until this morning.

Kuwait, UAE Favored

“Maybe the ideas need to be cooked a little more,” said Iraqi minister Issam Abdul-Rahim Chalabi, adding that some delegations would contact their governments for instructions.

The Iranian formula seems to favor the big Gulf producers with some of the poorer, debt-laden Third World OPEC members likely to get smaller increases in their mandated quotas. It drew a mixed initial reaction, delegates said.

Those getting special treatment would include Kuwait and the United Arab Emirates, whose demands to sell more oil and open violations of existing quotas are the hot issues at the talks.

A conference dispute flared between Saudi Arabia and Kuwait on Tuesday.

The Saudis say they are tired of seeing quota busters help themselves to sales of oil and, in the process, put enough excess on the market to keep prices below an OPEC target of an average $18 per barrel.

The problem for OPEC is that it can’t--for fear of flooding the market--set a ceiling on its total output high enough to fit the sales ambitions of Kuwait and the UAE into the quota system without others conceding percentage market share.

The three biggest OPEC producers, Saudi Arabia, Iraq and Iran, are among those who refuse to surrender any share of overall output.

But they would not do so under the reallocation now suggested by Iranian minister Gholamreza Aghazadeh, according to Iranian delegates.

Their share would stay the same while smaller producers Algeria, Nigeria, Indonesia, Libya and Venezuela would make the concessions.

Increase for 3

Three other smaller exporters, Ecuador, Gabon and Qatar, which also contend that their existing quotas are unjustly low, would get disproportionate increases like those for Kuwait and the UAE.

The trick would be to set the ceiling on total volume high enough to ensure that all of the 13 members got at least some volume increase--but low enough to achieve a boost in prices as a bait for those who lost on the percentage game.

A Gulf delegate said he understood that Kuwait would get 1.35 million barrels daily--which it says it wants--and so would the UAE. But the UAE wants more.

An Iranian delegate said Saudi Arabia may accept the idea as long as it keeps its historic 25% share.