OPEC should resist calls for rise in oil output

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By Antony Goldman in Abuja and William Wallis in Lagos - 14 Mar 2000 18:57GMT

Oil producers should resist pressure sharply to increase output as a means of reducing prices, currently at their highest level for a decade, Rilwanu Lukman, the Opec secretary-general said on Tuesday.

Opec meets later this month to review last year's voluntary agreement to limit production, which has contributed to a tripling of prices to more than $30 a barrel.

Bill Richardson, the US Energy Secretary, has been lobbying hard for a rise in production to take some of the heat out of the market.

However, in an interview with the Financial Times, Mr Lukman, who is also special adviser on petroleum to Olusegun Obasanjo, Nigeria's president, said he did not believe current prices were "unduly" high. He dismissed as "exaggerated" concerns expressed by industrialised countries over the inflationary consequences of high oil prices, saying that they should instead look at their own tax regimes.

"What we want is a steady market free from sharp price fluctuations, which will safeguard the interests of consumer countries and fellow producers alike," said Mr Lukman.

"We are optimistic that producers inside and outside Opec can come up with a wholesome agreement that can balance supply with perceived demand and facilitate price stability. We have an idea of where we want to go. Many would agree that $25/barrel would not be unreasonable."

As the Opec meeting draws closer, there has been an increasingly lively debate among member states and other big producers, such as Mexico and Norway over whether or not to increase production, and, if so, by how much. US allies, like Saudi Arabia, appear inclined to relax output quotas, while other players, such as Nigeria, are thought to favour maintaining a tough stance.

However, Mr Lukman dismissed such speculation as premature. "What we are seeing amounts to little more than producers thinking aloud, exploring certain possibilities," he said. "But the Opec meeting is not until the end of the month. A week is a long time in the oil market and prices are already moving down." Mr Lukman, whose term as Opec secretary-general expires at the end of the year, would not be drawn on whether he might seek to stay on in the post. Aides, however, argue that his continuing in the role might allow the organisation to tackle pressing price and production issues rather than a potentially divisive leadership contest.

-- Tommy Rogers (Been there@Just a Thought.com), March 14, 2000

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