Rilwanu Lukman, Nigerian minister of petroleum resources, was president of the OPEC conference in Vienna June 25 to June 27, when ministers of the Organization of Petroleum Exporting Countries decided on a slight production increase -- from 15.8 million to 16.6 million barrels a day -- to keep the price at $18 a barrel. Following the meeting he was interviewed by special correspondent Peter Hoffer.
The ministerial meeting in Vienna was harmonious and short compared with previous sessions. What are the main results?
There is just one main result, that we have pitched the production level (ceiling) for the second half of the year at 16.6 million barrels. I certainly believe that we can keep production balanced with demand so that prices will continue to firm up. We should have a very good half year, as was the first one.
Do you feel that the world oil market is now again being controlled by OPEC?
I would not use the word control. We are doing our own part to re-establish stability. If you choose to call that control, it's control... . Don't forget OPEC is only producing a third of the world's oil now. There are other people responsible for the other two-thirds. They should also participate in ensuring stability ... .
OPEC has repeatedly called on non-OPEC oil producers to come in and help re-establish stability. Why is it working now? Why is the present situation in favor of OPEC and why are the others not flooding the market any more?
Well, I wouldn't say the situation is in favor of OPEC as such. The present situation is in favor of rationality, as it were. We hope the non-OPEC countries appreciate the need for production restraint in the interest of all. This is what they are doing... . We would like to see this translated even more into real restraint, because OPEC is still producing at less than half its capacity and most of the non-OPEC countries are producing close to their full capacity. That's not a very healthy situation, because you cannot expect OPEC to continue to restrain itself to 50 percent of its capacity while others are going along at near 100 percent. So there is still need for some amount of greater understanding on the part of non-OPEC producers.
At the end of the year you will be having another ministerial meeting here in Vienna. Will you have to continue with your very restrictive course and do you intend to increase the price of oil further?
Right now we are concerned with what happens in the next six months. On the long term, we are quite happy if the market continues as it is going now, because none of our friends in the non-OPEC countries could compete with us in view of the price cost of production. So in the long run the world has no other resort than OPEC oil. It's just a matter of common sense for the actors in this field to realize this fact of life and accommodate it in their computations and come along with us to do something that will benefit all concerned.
But we will not try to hold anybody to ransom on that score. We think we should be sensible enough to ask others to come along with us. Over the next years some form of restraint will continue to be required and hopefully after that period the demand for oil will increase.
If the international economy is allowed to resume growth, I presume that stability of oil prices would be OPEC's contribution towards this international growth. When this growth takes place OPEC will hopefully be able to sell more oil to the world.
Talking about price, one believes the price of oil should not be allowed to rise catastrophically as has been done in the past... . We want to prevent oil prices rising too high to make it uncompetitive with other forms of energy, so that it makes substitution (attractive). On the other hand, we want to make sure that the price of oil is sufficiently remunerative to encourage us and other oil producers to invest in exploration and development. So we should pitch the price at a level that takes all these considerations into account. If it means we should increase the price, then we will. If it means that we have to lower the price, then we shall lower if.
What is the price range as you see it -- the lowest price and the highest price OPEC would (demand) up to the year 1990?
It depends on one factor over which we have no control -- the value of the dollar. If the dollar continues to depreciate as it has done in the past six months, we are talking of a different ball game. If it rises, then again a different scenery will appear. But if the dollar remains resonably stable, then one would expect an increase at least consistent with the rate of inflation in the developed countries. At the expense of being presumptuous, I would feel that a price range of between $20 and $22 would be right during the next two years.