OPEC Considering Raising Oil Production Ceiling

JAKARTA, Indonesia — Saudi Arabia has convinced most OPEC ministers it’s time to pump more oil, but still undecided is which nations will get to produce how much extra crude, delegates to the group’s meeting here say.

Libya remains a holdout, fearing an increase in the production ceiling would bring lower crude prices--a good thing for consumers but bad news for oil producers, they said.

Most ministers of the Organization of Petroleum Exporting Countries agree the official production ceiling should be raised, Indonesia’s Ida Bagus Sudjana said after the group’s conference, which takes place twice a year, opened on Wednesday. But the ministers are sharply divided over the size of any output increase, and one delegate suggested that Libya might not be the only holdout against the idea.

With the talk of extra pumping, oil prices tumbled on world markets. Light sweet crude oil for January delivery fell 58 cents to $19.15 per barrel on the New York Mercantile Exchange from 19.73 on Tuesday. Home heating oil and gasoline prices were also down.

The ministers met for 90 minutes and then recessed for two days of informal talks. The conference is expected to last until next Wednesday.

The ministers were unable to have a serious discussion of the contentious production issue because Venezuela’s Erwin Arrieta has not yet arrived. It is not clear when he would show up.

Venezuela is responsible for the biggest chunk of overproduction--900,000 barrels a day more than its quota--in OPEC. And the group’s efforts to grab a bigger share of the growing global market for oil will be stalled without Arrieta.

Arrieta said in Caracas that he was delayed by contract talks with Venezuela’s oil worker unions and would leave late Wednesday for the OPEC meeting.

Arrieta noted that Venezuela was represented at the opening by lower-level oil officials. He blasted others in the 11-nation organization for “spending too much time worrying about quotas and production, which has only caused internal problems within OPEC.”

All the ministers acknowledge that OPEC is exceeding its current supply ceiling of 25.033 million barrels a day by more than 2 million barrels, and they feel the market is able to absorb that much additional oil without too much damage to the price, another OPEC delegate said.

But ministers disagree over how much more oil the producers might be able to sell next year without frightening traders, said the delegate, who spoke only on condition of anonymity.

Saudi Arabia has taken a bullish view, arguing that world oil demand will rise by some 2 million barrels a day next year and that OPEC should be able to supply half of that, the delegate said. Other ministers worry that non-OPEC producers will take a bigger share of the market.