Ministers of the Organization of Petroleum Exporting Countries agreed tonight to adjust price differentials for crude oil in an effort to keep the benchmark price of Arabian light at the $29 a barrel set last October.
They also agreed, in the face of falling prices on the world market, to put into operation "as soon as is feasible" a monitoring system to ensure that member states do not cheat on the $29 price or exceed the production quotas allotted them in October.
Algeria and Nigeria, however, refused to go along with the adjustments on differentials in what was seen as a continuing rift on the issue and a weakening of the common front. Nigeria had pushed for an increase of $1 to $1.50 a barrel in heavy crude, which would have made its light crude more competitive. Algeria supported Nigeria's proposal.
A committee headed by Saudi Arabian Oil Minister Ahmed Zaki Yamani worked through the night to forge details of the monitoring operation after the regular meeting of the OPEC ministerial conference broke up late last night.
The lack of details as to how the policing arrangement will operate, who will run it and what sanctions -- if any -- it will be able to impose, made oil industry analysts at the meeting skeptical of its effectiveness.
"We hope and expect that the spot market has received the signal that OPEC is serious about doing something about prices and output, and we hope they will respect this determination," Indonesian Oil Minister Subroto, chairman of the conference, told a news conference. The spot market consists of one-time sales of oil cargoes at separately negotiated prices not based on long-term contracts.
Subroto said the ministers will meet again "not later than February" to discuss the issue of differentials -- surcharges and discounts based on variations in quality and other factors -- "in the light of market conditions." He said OPEC would be monitoring spot market conditions much more closely in the future.
Spot prices have hovered about $1.50 below OPEC prices since the October meeting, despite predictions by Yamani that OPEC's decision to hold the line on the benchmark price -- the reference standard -- and enforce production controls would force spot prices up.
In addition to maintaining the benchmark price at $29 a barrel the conference decided to raise the price of heavy crudes by 50 cents a barrel and that of medium crudes by 25 cents a barrel and to lower the price of extra-light crudes by 25 cents a barrel.
"Everyone had a different position on differentials, so I suppose you could say with 13 members you had 13 positions," Subroto said. "But this is important input for the committee on differentials."
This committee, also headed by Yamani, will meet in January to consider whether the differentials agreed on at yesterday's meeting are effective.
Oil Ministers Belkacem Nabi of Algeria, Ali Khalifa Sabah of Kuwait, Tamunoemi David-West of Nigeria and Abdul Aziz Thani of Qatar were brought into the committee to join Yamani; OPEC's acting secretary general, Fadhil Chalabi; Libya's acting oil minister, Fawzi Shakshuki, and United Arab Emirates Oil Minister Mana Said Otaiba, who were already members.
The monitoring committee, chaired by Otaiba and charged with checking conformity with pricing and production regulations, was enlarged to include Nabi and oil ministers Javier Espinosa Teran of Ecuador, Mohammed Gharazi of Iran, Qassim Taki Oraibi of Iraq and Shakshuki.
Subroto said the question of what sanctions would be imposed on members who broke ranks and sold more oil or charged lower prices was being worked out by Yamani's committee and would be ratified at the next ministerial meeting.
OPEC sources said the draft policing agreement Yamani is working on includes auditing the books of oil producers in the 13 nations, spot checks on tankers leaving their ports, and eventual monitoring of deals in the spot market.
The ministers once again ducked a decision on a new secretary general, directing Chalabi to continue his actng role. Under OPEC's regular rotation system, Iran would be next in line for the job, but the war between Iran and Iraq has blocked an appointment for 18 months, since the resignation of Marc Nguema of Gabon.