On the eve of a critical meeting of the Organization of Petroleum Exporting Countries, Nigerian Oil Minister Tamunoemi David-West declared today that his country would not consent to any cuts in production in order to shore up sagging world oil prices.
David-West also said that Nigeria, which broke the cartel's ranks by dropping its oil price by $2 per barrel to keep pace with non-OPEC members Britain and Norway, would not rescind its price cut and "could not give any deadline" when it might rejoin OPEC's pricing structure.
Underscoring growing tensions within the 13-nation cartel, Oil Minister Mana Said Otaiba of the United Arab Emirates indicated in an NBC-TV interview that unless price differentials for the various grades of OPEC crude were readjusted, he would cut the price of oil from the Emirates.
The mood of intransigence appeared to portend the most serious difficulties in the 24-year history of the cartel.
A four-member market monitoring group is expected to recommend that OPEC impose new quotas slashing production, perhaps by 3 million barrels, to soak up a persistent global glut and defend OPEC's benchmark price of $29 per barrel.
Last week, Oil Minister Ahmed Zaki Yamani of Saudi Arabi said OPEC's strategy was to avoid any further drop in price and to correct downward market forces by securing agreement on lower production quotas. He said he expected demand to pick up with the onset of winter, thus easing the current crisis.
But there is still no sign that OPEC is prepared to reach quick agreement Monday on how to apportion production cuts among its rich and poor members.
David-West insisted at a press conference here that "asking Nigeria to cut production by even one barrel would be suicidal."
Surging oil production by non-OPEC members has cut the cartel's share of the world market nearly in half during the past five years. The steady loss of customers has squeezed several OPEC members, such as Nigeria and Indonesia, at a time when they need more income to cope with heavy debt burdens.
Since oil is traded in dollars, the high value of the U.S. currency has forced many customers to cut purchases further.
Another factor is that many firms retooled refineries at a cost of billions of dollars to switch from light to heavy crude oil, which is cheaper by several dollars a barrel. But the rising demand for heavy crude has begun to warp the OPEC pricing system, which still sets a premium on light oil.
The growing controversy over OPEC's price differentials between heavy and light crude poses a fundamental threat to the structure of the cartel, which is why many countries have cautioned against any substantial changes.
Most OPEC oil ministers gathering here have said they would prefer to deal with the delicate issue of differentials at the next regular meeting here, in December.
But Otaiba, the United Arab Emirates oil minister and the head of the market monitoring committee, said, "If no solution is found here, then I will solve the issue myself when I go back home," implying that he would cut the price of Emirates oil unilaterally if OPEC could not agree upon an adjustment.
The booming production of non-OPEC countries, however, remains the most serious external threat to the cartel's power. The Soviet Union, Mexico, Norway, Britain, Egypt and China have become increasingly important forces in the world oil market.
After its last meeting in Vienna this summer, OPEC agreed to dispatch a series of diplomatic missions to these countries soliciting greater cooperation in managing the world market.
They achieved only limited success, largely because the other oil producers no longer are convinced of OPEC's ability to act as a unified market force.
OPEC officials fear that any further reduction in the marker price, only 18 months after the cartel agreed in London to its first price cut of $5 a barrel, would be perceived on the world market as a sign of weakness that could trigger a further slide in prices.
Because of the current state of the oil market, many OPEC members have felt compelled to "cheat" on prices to keep customers, by offering secret discounts, deferred payment or barter arrangements.
Even Saudi Arabia, which as the swing producer is supposed to police the market by adjusting its output to ensure price stability, infuriated its partners this summer by swapping millions of barrels of oil for Boeing 747 jumbo jets.
The erosion of the cartel's discipline has become self-perpetuating. David-West today implied that Nigeria chose to go its own way in cutting its prices recently because of such cheating, which he diplomatically described as "mistakes" committed by other producers.
As one of OPEC's most populous and financially troubled members, Nigeria has no room to make further sacrifice, David-West said. The new military government, he added, could not be held accountable for the corruption and blunders of the past. He said there was "a very vocal minority" in the country opposed to OPEC and warned that its influence would magnify if fellow OPEC members did not help.
David-West said Nigeria had no choice but to follow Norway and Britain after they cut the prices two weeks ago. "Oil is the life of Nigeria," he said. "We could not wait more than 72 hours.