OPEC'S WOES MAY TAKE CENTER STAGE AT TALKS

OPEC'S WOES MAY TAKE CENTER STAGE AT TALKS

A slump in world oil prices and tensions within OPEC could overshadow three days of talks between major oil producing and consuming countries whose delegations gathered here.

This year's conference, which is being hosted for the first time by an OPEC member, is the fourth in a series initiated in 1991 to discuss the lessons for the oil markets of the Gulf War.As with previous conferences, this year's talks typically address broad energy issues and have attracted fairly low-level representation from the consuming nations.

However, this meeting has aroused more than usual interest from oil market participants. A high number of OPEC ministers are attending amid a breakdown in the producer group's production quota discipline in the face of a relentless loss of market share to producers from outside OPEC.

Chronic quota-busting has pushed OPEC production to a 15-year high, which has contributed in part to the weak oil price. The price of North Sea benchmark Brent Blend crude has lost more than $1.20 a barrel in the past 10 days.

The first order of business here for OPEC Secretary General Rilwanu Lukman and three of the group's ministers was a meeting of OPEC's quota compliance committee.

Overproduction is one of the thorniest issues facing OPEC, with estimates that the group is producing well more than a million barrels a day above its official production ceiling of 24.53 million barrels a day. The two main quota violators are widely reckoned to be conference host Venezuela and Nigeria.

Mr. Lukman, a former Nigerian oil minister, asked just ahead of the compliance committee meeting if OPEC ministers will hold talks here on production policy, replied testily: "Why should we?"

Venezuelan Oil Minister Erwin Jose Arrieta told journalists on Saturday that "it is never our intention" to produce above the country's official quota, though Venezuelan industry sources say that output in August was around 2.73 million barrels a day, compared with an official ceiling of 2.36 million barrels.

Despite the fact that nine of OPEC's 12 oil ministers are turning up for the talks this year, they will be trying their best to keep problems quiet, said a senior Gulf source.

"They might talk bilaterally but they are keen to keep things quiet," he said.

With a full OPEC ministerial meeting due in November, however, the ministers are expected to find it hard to avoid discussion of their problems at a conference designed to address the major energy issues of the day.

Also attending this week's meeting are ministers from a few non-OPEC oil- producing countries that OPEC has hitherto had little success in recruiting for a production-curbing initiative.

The oil minister of Norway, one of the world's largest oil exporters and not a member of OPEC, told reporters upon his arrival that it was not the time for Norway to cut production.

"We don't regard it as a viable option right now but we don't exclude that it can happen in the future," Jens Stoltenberg said.