SAUDI OIL MINISTER SEES NO NEED TO ALTER PACT
Saudi Arabian Oil Minister Hisham Nazer
said OPEC's December agreement to stabilize oil prices at 18
dlrs a barrel was being implemented satisfactorily and there
was no immediate need to change it.
    Nazer, in an interview with Reuters and the television news
agency Visnews, said Saudi Arabia was producing around three
mln barrels per day (bpd) of crude oil, well below its OPEC
quota.
    Saudi Arabia, the world's largest oil exporter, will
continue to restrain production as long as other OPEC members
adhere to the pact, Nazer said.
    The 13-nation OPEC agreed in December to cut its production
ceiling by 7.25 pct to 15.8 mln bpd and abide by fixed prices
averaging 18 dlrs a barrel from February 1.
    Nazer, in his first interview since succeeding Ahmed Zaki
Yamani last October, said: "I do not foresee any need for new
measures before the 25th of June when our (next OPEC) meeting
will take place as scheduled."
    Nazer said OPEC was producing below 15.8 mln bpd and all
members were abiding by its agreements.
    "We've heard news every now and then of violations but they
were not at all verified," he said.
    OPEC production curbs have boosted world oil prices from a
13-year low of around eight dlrs a barrel last August to near
18 dlrs after announcement of the December pact.
    Spot market prices slipped some two dlrs in February but
have firmed in the past two weeks to near OPEC levels as
traders gained confidence in OPEC price and output discipline.
    Nazer said Saudi Arabia would continue to produce below its
4.133 mln bpd quota if necessary to defend the 18 dlr price.
    "As long as all the OPEC members adhere to the program as
devised in December, Saudi Arabia will continue to adhere to
the agreement," he said.
    Current production of three mln bpd includes oil from the
Neutral Zone shared with Kuwait, but not sales from floating
storage, Nazer said.
    King Fahd of Saudi Arabia, in an interview with Reuters and
Visnews on March 11, said the kingdom wanted oil price
stability and called on non-OPEC producers to avoid harmful
competition with OPEC.
    "Saudi Arabia doesn't decide prices by itself but certainly
desires price stability," he said.
    Nazer said the output level did not mean the kingdom had
returned to a role of "swing producer" within OPEC.
    Saudi Arabia allowed its output to sink as low as two mln
bpd in August 1985 to compensate for slack demand and
over-production by some OPEC states.
    "Saudi Arabia is not playing that role. It is being played
by OPEC membership as a whole because the reduction in the 15.8
mln bpd share of OPEC in the market is being shared by other
members of OPEC," Nazer said.
    Nazer said OPEC estimated demand for its oil during third
quarter this year would be around 16.6 mln bpd.
    But he said if circumstances changed "I am sure then the
OPEC members will consult with each other and take the
necessary measures."
    Oil analysts say the OPEC pact could come under strain when
demand for petroleum products generally falls in the northern
hemisphere spring and summer.
    Nazer said he was satisfied with the extent of cooperation
from non-OPEC producers. Norway, Egypt and the Soviet Union
agreed to help OPEC by restraining production or exports after
he visited them on OPEC's behalf earlier this year.
    "We did not ask any country to do anything. These were
programmes they thought were necessary to stabilise market
conditions and to help themselves attain better pricing
conditions," Nazer said.
    He said it was up to countries that declined to cooperate
-- such as Britain -- to come up with their own proposals if
they saw fit.
