OPEC set for easy oil deal, secretary-general dispute

VIENNA Tue Dec 11, 2012 8:58am EST

VIENNA (Reuters) - OPEC oil exporters look set this week to avoid a quarrel about how much crude they produce and argue instead about who should be the group's next secretary-general.

Oil prices are roughly where OPEC wants them - comfortably above $100 a barrel - but there is deadlock over who should be the new public face of the organization.

At a meeting in Vienna on Wednesday the 12-member Organization of the Petroleum Exporting Countries is expected to retain its 30 million barrel a day (bpd) output target for the first six months of 2013.

"As long as there is demand there is no need to change," said UAE Oil Minister Mohammed al-Hamli, who is normally aligned with other Gulf Arab producers including Saudi Arabia.

Iran, often among the most hawkish in OPEC on price, said it was satisfied with a market now near $108 a barrel for Brent crude. "The market situation is good right now, relatively balanced. The price is OK for the moment, it's not too high," said Iranian Oil Minister Rostam Qasemi.

"At current prices there is little incentive to change either the 30 million OPEC-wide production target or to reduce actual production, running around 31.0 million," said Washington consultancy PFC Energy.

Signs are though that leading OPEC producer Saudi Arabia recognizes that crude demand growth is slowing as the global economy stalls again.

An OPEC report on Tuesday showed Saudi trimmed output to 9.5 million bpd in November from a 30-year high above 10 million bpd earlier in the year, reducing overall OPEC output to 30.8 million bpd.

OPEC's own maths suggest that it is pumping much more than world markets need, pointing to a stockbuild and the possibility of a fall in prices at the start of next year.

Cartel economists assess demand for OPEC crude in the first half of 2013 at 29.25 million bpd, implying a 1.5 million bpd stockbuild during that period on the 90 million bpd world market assuming current OPEC rates of supply.

"While prices are in the comfort zone there is little appetite for over-analyzing the fundamentals even if there is a little too much oil," said Bill Farren-Price of Petroleum Policy Intelligence.

Oil inventories in industrialized OECD countries already are at 59.6 days of future demand, according to the International Energy Agency, significantly above the five‐year average for the first time in 2012.

That may spur OPEC's price hawks - Iran, Algeria and Venezuela - to seek assurances from Saudi Arabia, the biggest exporter, that it will trim output should prices fall below $100 a barrel.

"Many countries have used $100 for their budgets so I think the price now is good for us," said Iraqi Oil Minister Abdul-Kareem Luaibi.

Venezuelan Oil Minister Rafael Ramirez said he expected no change in output policy.

Saudi Arabia has filled the one-million-bpd gap left by sanctions against Iran's nuclear program that have sliced its exports in half, so Riyadh would be expected to cut first in the event prices take a dive.

While agreement on output policy looks straightforward, a decision on who to appoint secretary-general does not.

Candidates from Iran, Iraq and Saudi Arabia are competing to replace the 72-year old Libyan Abdullah al-Badri, who has been in the job 5 years.

Election requires a unanimous vote. Political rivals Saudi Arabia on the one hand and Iran and Iraq on the other refuse to budge and no suitable compromise candidate has emerged.

That means, said OPEC delegates, that it is likely that al-Badri will be asked to stay in the job for another 6 months.

"This is a difficult situation," said Iraqi oil minister Luaibi. "It is dangerous for the future of the organization. This condition might affect the oil markets, I want all the members to understand this danger."

The candidates are Saudi Arabia's OPEC governor Majid Al-Moneef, former Iranian oil minister Gholam Hossein Nozari and Thamir Ghadhban the energy adviser to Iraq's prime minister.

(Additional reporting by Amena Bakr, Peg Mackey, Emma Farge. Editing by Richard Mably and William Hardy)