OPEC keeps oil output unchanged, urges compliance

VIENNA (AFP) - The OPEC oil cartel on Sunday froze its output at current levels and urged its 12 member nations to comply with last year's deep cuts as a savage global downturn dents energy demand. The Organisation of Petroleum Exporting Countries said it will reconvene here on May 28 for an extraordinary meeting to assess the market. The move will allow time for the Group of 20 (G20) rich and emerging nations to respond to the global economic crisis at a London summit on April 2, it added. "It's a rollover until May," Iraqi Oil Minister Hussein al-Shahristani said after the cartel's crucial production meeting in Vienna. OPEC Secretary-General Abdalla Salem El-Badri told a new conference that pushing member states to adhere to previously agreed cuts "will reduce the overhang" of oil in the market. Currently, there was an estimated 80pc of compliance, which was "a very good percentage," El-Badri said. But "if we have more compliance, we can reduce it further. We've called another meeting in May. If something happens between now and May, we'll have to correct the market in May," El-Badri said. OPEC has already slashed its output three times since September as crude prices slumped in the face of a worldwide economic slowdown. "The conference was concerned to note that the world economy is in the midst of the worst global economic recession in decades," OPEC said in a closing statement. OPEC added that it "observed with concern the deep impact of the economic downturn on world oil demand". OPEC's official daily output quota currently stands at 24.84m barrels after the cartel agreed to slash 4.2m barrels late last year in an attempt to energise weak oil prices - but questions remain about compliance. Algerian Energy Minister Chakib Khelil added that the May meeting would allow time for the G20 to coordinate an international response to the global economic crisis. "I think it was a responsible position (to hold output) and also to give the chance to the G20 to do its job on April 2. In light of the decision they will make, we'll make our decision on May 28." He added: "All of us will have to make an extra effort to be at 100pc" in terms of compliance with last year's output cuts. "And then (in May) we will have a chance to review compliance." The cartel also said the world economy was forecast to contract by 0.2pc in 2009 and estimated that global oil demand would drop by 1.0m barrels per day (bpd) in 2009 to stand at 84.6 million bpd. In the run-up to the Vienna meeting, the outcome had been unclear with Algeria and Libya calling for an output cut, and Ecuador, Iraq, Kuwait and Qatar all railing against such a move. OPEC kingpin Saudi Arabia had indicated that it would prefer to seek compliance before lowering production again. The kingdom has repeatedly stated that it wants oil anchored at a "fair price" of about $75 per barrel. But the market has collapsed since hitting record heights of above $147 a barrel in July, slashing the income of OPEC's 12 members. Oil prices remain more than $100 underneath the historic heights scaled last summer, and traded at about $45 per barrel on Friday. The gathering of ministers from OPEC, which pumps around 40pc of the world's crude supplies, was also attended by non-member Russia. Russia said Sunday it has discussed sending a permanent observer to OPEC, deputy premier Igor Sechin told a meeting of OPEC ministers. Russia rivals Saudi Arabia as the world's largest oil producer and has been deeply impacted by the plunging prices OPEC comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq does not have an output quota due to unrest in the country.

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