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Naimi meets with Mexican minister ahead of key talks
Riyadh,12th March 2001
Key oil producers Saudi Arabia and Mexico discussed how to balance world oil markets yesterday ahead of crucial talks here today which will include Venezuela.

“The Kingdom of Saudi Arabia and Mexico are linked in a good petroleum relationship to coordinate petroleum policy concerning the oil market,” Minister of Petroleum and Mineral Resources Ali Al-Naimi said in a statement distributed to reporters after the talks with his Mexican counterpart Ernesto Martens. The statement made no mention of whether the two sides discussed producers’ output strategy ahead of OPEC’s March 16 meeting in Vienna.

After the 90-minute meeting, Martens said the two producers were working together to balance world oil markets. “We have reviewed oil market conditions and we are working together to preserve market balance and ensure the interests of producers and consumers,” he said.

The Mexican energy minister confirmed that he would meet with his Saudi and Venezuelan colleagues together at 6:30 p.m. in Riyadh today. Venezuelan Oil Minister Alvaro Silva is due to arrive in the Saudi capital early today and hold bilateral talks with Naimi before the trio gather.

Meanwhile, Martens, accompanied by Ambassador Edgardo Flores, left for the Eastern Province yesterday for a tour of Saudi Aramco’s production facilities. They will return to Riyadh today in time for the tripartite meeting.

It was not immediately clear whether non-OPEC Mexico had been persuaded to participate in OPEC’s widely expected supply cuts of between 500,000 and one million barrels per day (bpd) during the seasonally weak second quarter. Mexico would not be attending OPEC’s Vienna meeting, according to Martens.

Prior to his Riyadh visit, the Mexican minister repeatedly said there was no need for further reductions in output as the global supply-demand situation was largely balanced.

The producer troika orchestrated a series of output curbs in 1998 and 1999 that hoisted oil prices from $10 a barrel lows to historic highs of more than $30 a barrel last year. OPEC enforced a 1.5 million bpd curb on supplies from February in a bid to stop prices from unraveling during the second quarter. But the oil producing countries, fearing a global economic downturn will further erode demand, is searching for a way to cut supply without harming the fragile world economy.

A Saudi official said on Friday that OPEC was heading for a second round of output cuts this year, but that the size of the reduction had yet to be determined ahead of its meeting on Friday. OPEC’s current president, Energy Minister Chakib Khelil of Algeria, has not specified the volume of output cut, but it is believed to be in the range of  500,000 to one million barrels per day.

An official source in the Ministry of Petroleum and Mineral Resources said the Kingdom’s policy had always been to promote stability in the international oil market with due regard to the interests of both producing and consuming countries.

Referring to the oil consuming countries’ criticism that the rising oil prices have caused hardships to the end consumer, the ministry said, “In western countries, such as Germany, Britain and Italy, 80 percent of the end value paid by the consumer is taken by the governments, while the petroleum industry and the producing countries receive only 20 percent, including upstream, downstream and other operating costs.”

It added that the Kingdom and other OPEC countries had done much to stabilize the market. OPEC has reached an agreement aimed at achieving medium-term market stability by agreeing to a price range of $22-28 a barrel for an OPEC basket.  The current move for a cutback in production should be seen within the framework of this mechanism, the ministry said quoting an OPEC policy statement.


Source: Arab News

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14 March 2001 07:22:59 PM

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