Saudi Arabia's Petroleum Minister Sheikh Zaki Yaman said yesterday that there is no indication that the Organization of Petroleum Exporting Countries can meet any time soon to repair the split over oil prices that has bitterly divided it members.
His country's policy of price modernation, he said in an interview, remains firm despite strong criticism from some other OPEC states. Without saying so specifically, he indicated that this policy could apply to 1978 as well.
A proposed compromise that Saudi Arabia rejected earlier this week, he said, would have committed all 13 OPEC members now to raise their prices by at least another ten per cent next year.
"Anything is possible" because of uncertainties of the world oil market and the turmoil within OPEC, he said. But he stressed that Saudi Arabia is sticking to the position it took at the OPEC conference in December, opposing any price increase as a threat to the health of the world economy.
Saudi officials and diplomatic analysts interviewed over the past week have said without exception that this is a genuine concern on the part of the Saudis not a political ploy.Saudi plus cash invested in western securl-plus cash invested inwestern securityies and government notes whose value could be threatened by political instability or eroded by inflation.
At OPEC's conference in December, Saudi Arabia and the United Arab Emirates set a price increase of 5 per cent for 1977.
The other OPEC states raised prices 10 per cent January 1 and have agreed to a further 5 per cent boost in July.
Eight weeks after that conference the outcome is pretty much what Yamani predicted at the time, he said. The 11 states that decided on higher increase find their production and revenues declining as buyers turn to lower price crude from Saudi Arabia and the UAE, and the Saudis wait confidently for the others to cut back on their pices.
"It's early to give a definite picture," Yamani said, "but all indications show buyers trying to phase out their listings from certain oil producing countries." He did not name the countries but both Iran and Kuwait have reported major production cutbacks.
In an effort to end the split, the oil minister of Qatar, Abeelaziz Al-thani, came here last week offering a compromise. He suggested that Saudi Arabia and the UAE and another 5 per cent to their prices in July and that the others drop their planned additional increase leveling everybody off at 10 per cent above 1976 prices.
Accroding to Yamani, the Qatar plan also included a proposed commitment from all members to a further 10 per cent boost next year. At current prices of more than $12 a barrel, such an increase by itself would merely equal the entire actual price less than a decade ago.
"We said no," Yamani said.
Contrary to expections, however, Yamani said production declines elsewhere cannot be directly attributed to increases here. This country, the world's leading oil exporter, has cancelled its production ceiling of 8.5 million barrels a day and will sell to meet demand, he said, but actual production declined in January.
He said bad weather plagued the tanker port of Ras Tanura so that on some days no oil was moved out and on others as few as three millions barrels were exported. Overall, January productions was lower than before the OPEC price split.
It should soon go back up he said, but "no one can give you a figure for this year's oil production." The country's export capacity is about 11.3 million barrels a day but it is not clear whether that figure will be reached or it it is for how long that level will be sustained.
In the interview, Yamani also reported that new oil discovers have greatly increased the country's crude reserves. The previous official estimate of reserves was 137 billion barrels, about a fifth of the world's total. White new figures have not been fully complied, he said, the reserves now are more than 150 billion barrels.
Exploration is continuing, he said, and "some geologists and geophysists think the undiscovered oil equals what has been found."
Yamani denied the government had ordered Aramco, the American Consortium than markets most Saudi oil, to sell any increased production to other oil companies selected by the government.
It has been widely reported in the western press that the Saudis had directed Aramco's four partners - Texaco, Exxon, Mobile and Standard of California - to sell their crude supplies fro mthe anticipated production increase to four other oil companies that have not previously had access to Saudi crude. These reports suggested that the Saudis wanted to make this lower-priced oil available to companies that normally obtain their crude from other OPEC nations whose prices Saudi Arabia is trying to undercut.
Yamani said the entire story was "speculation" that would not stand an inquiry among the oil companies themselves.
"Aramco does not have the capacity to absorb increase. So they will sell to third parties, selected by them, not by us, at least for far," he said.