Norway Says No, Mexico Unsure On Production Cuts
Norwegian Oil Minister Olav Akselsen said on January 9th that his country does not intend to cut production in conjunction with OPEC’s anticipated output reduction when the oil cartel next meets on January 17th.
Akselsen said that: “As the situation stands today, with the prices we have today, there are currently no plans for Norway to contribute anything towards this end.”
The oil minister indicated that Oslo is interested in stabilizing huge oil price swings from below $10 a barrel in 1999 to above $35 a barrel in 2000, but has no fixed price targets.
The 2001 Norwegian budget assumes an average oil price for the year of 180 Norwegian crowns ($20.59), likely leading to a large budget surplus for the year.
Mexican Energy Minister Ernesto Martens said also on January 9th that he sees a surplus of oil in world markets, but that his country had not yet decided whether to slash production along with OPEC.
Martens said that: “The current evidence in the market shows that there is an excess of supply, so it’s logical to think of a reduction in output.”
He added that: “Mexico, as an OPEC observer and in accord with its own strategy, will make the decision on which road to take at the right time.”
Mexico currently exports around 1.7 million b/d of oil and expected an increase in production capacity of 100,000 b/d as of the end of 2000, as well as an additional boost in capacity of 200,000 b/d in April.
Both Norway and Mexico have cooperated with OPEC in the past, first to shore up plunging prices in 1998 and 1999 and then to cool overheated markets in 2000.
OPEC Secretary General Ali Rodriguez indicated on January 7th that the cartel had reached consensus to cut production at the upcoming meeting, but had not determined by how much.
Most OPEC members agree that cutting production by 1.5 million b/d should be sufficient to balance supply and demand, although the group’s price hawks are clamoring for more barrels to be slashed.
© 2001 Mena Report (www.menareport.com)