OPEC urges independent producers to share in production cuts

The Associated Press contributed to this report

Independent oil producing nations must contribute to possible upcoming production cuts if they expect robust oil prices to last through next year, OPEC Secretary-General Alvaro Silva said Sept. 29.

Reciprocal cuts from major independent producers would be “fundamental and necessary” if the Organization of Petroleum Exporting Countries decided to trim its own production at its Dec. 4 meeting, Silva said.

Indonesian Mines and Energy Minister Purnomo Yusgiantoro, who will assume presidency of OPEC after the first of the year, said Sept. 29 that non-OPEC producers would be asked to cut 500,000 barrels a day collectively at the December meeting.

The next day Purnomo told reporters he wasn’t optimistic that non-OPEC members would comply with the cartel’s request, citing Russia as an example of a country which was not expected to cut production.

Silva did not specify whether OPEC would condition a decision to scale back its own production on reciprocal cuts from independent producers. Last December, OPEC demanded that independent producers slash output by 500,000 barrels a day before agreeing to trim its own production by 1.5 million barrels a day.

OPEC produces about a third of the world's oil.

In the third week of September, OPEC decided to slash its output ceiling by 900,000 barrels a day to 24.5 million barrels a day starting Nov. 1, fearing that weakening demand and recovering Iraqi production could result in a plunge in prices.

Silva accused non-OPEC producers like Mexico and Russia of seizing market share while benefiting from oil prices kept high in part by OPEC cuts.

“It is obvious that non-OPEC countries are taking market share from OPEC ... and in a way that isn't fair,” Silva said in a telephone interview from Detroit, Mich., where he is attending a U.S.-Arab Economic Forum.