OPEC oil ministers agreed in principle today to establish a monitoring unit that would check compliance by the cartel's 13 members with its production and price-setting levels.
The agreement was to be checked with heads of state of the 13 members of the Organization of Petroleum Exporting Countries before the group's ministerial conference here Dec. 27, and details remained unclear.
Moreover, Egypt, which is not a member of OPEC, said it would not participate in the proposed monitoring system, and other major oil producers such as Britain and Norway have not even been consulted.
The suggestion that a watchdog body be set up to check compliance with OPEC's price and production levels came from a five-man committee that met through last night in a bid to solve the problem.
OPEC set a production ceiling of 16 million barrels a day and a benchmark price of $29 a barrel for Arabian light crude at its October meeting, but these two norms have been widely flouted in the ensuing two months -- often by OPEC members themselves.
Current production from OPEC countries is estimated at 17 million barrels a day, according to oil experts here. While no names have been mentioned officially at the conference, Nigeria, struggling against economic adversity, and Iraq, in need of funds to finance its war with Iran, have been mentioned as the major transgressors. The $29 benchmark price set at the October meeting also has come under attack. Spot prices on the Rotterdam exchange for Arabian light crude are hovering around $27.
To put some muscle into OPEC's pricing and production mechanism, the committee proposed a "watchdog" body that would monitor all oil transactions of the OPEC members.
Exactly how this would be done remained unclear, although Indonesian Oil Minister Subroto said he expected ministers to return here Dec. 27 with "clear instructions" as to how the new body would operate.
Also unresolved was the question of where it would be located and what form it would take. The committee originally suggested that it be a sub-body of the OPEC secretariat in Vienna, but when ministers held a preliminary discussion of the idea today before adjourning for Christmas, some countries suggested that the monitoring group should have an identity of its own and be located in Geneva. Others said they feared that such a body would have too much power over member countries' own policies.