Kuwait to Lobby for Oil Production Quota

By Ibrahim, Youssef M. | THE JOURNAL RECORD, April 21, 1992 | Go to article overview

Kuwait to Lobby for Oil Production Quota


Ibrahim, Youssef M., THE JOURNAL RECORD


By Youssef M. Ibrahim N.Y. Times News Service KUWAIT CITY _ Kuwait is preparing to begin lobbying for a much large oil production quota when members of the Organization of Petroleum Exporting Countries meet Friday in Vienna.

It is a little more than a year after retreating Iraqi soldiers set fire to Kuwait's oil wells, and the emirate's oil output is now on the verge of 1 million barrels a day, compared with its assigned share of OPEC production of 812,000 barrels a day.

The ministers will have discussions this week with oil producers that are not members of the Organization of Petroleum Exporting Countries, and Kuwait is certain to make its position clear in advance of another OPEC session planned for the end of May, at which the members will set the individual quotas.

To make room for Kuwait's rapidly returning oil production, others in the cartel will have to trim their own output or risk seeing oil prices plunge as more oil hits world markets while demand remains static.

"We expect that OPEC will agree to a significant quota increase for Kuwait to compensate for lost time, lost production and much lost income during the long months of this savage Iraqi invasion, which did huge damage to our country," said Hamoud Raqba, Kuwait's oil minister.

Kuwait's determination will almost certainly clash with Saudi Arabia's expressed desire to retain its current high level of production and with Iraq's eventual return to world oil markets as an exporting nation, a development that is highly likely if the United Nations lifts its economic sanctions against Baghdad.

The Kuwaitis say they believe that the Saudis will eventually yield some of their production for their Kuwaiti allies, but they are eager to bar the road to Iraq, which before the Persian Gulf crisis ranked alongside Iran as OPEC's largest producer after Saudi Arabia.

Kuwait says it badly needs the money to make up the losses from the war, which cost it $65 billion and cut deeply into its assets of nearly $100 billion.

In addition, the Kuwaiti budget this year has a $17 billion deficit that must be financed by borrowing, since income from oil and investments is not enough to cover the costs of reconstruction.

Oil income reached $10 billion to $12 billion a year in the 1980s but will not average more than $3 billion this year.

Kuwaiti oil industry officials say the country's production, which was virtually nil a year ago, was running at 920,000 barrels a day last week and will reach 1.5 million barrels a day before the end of the year. Oil industry experts view these plans as feasible, given the priority Kuwait has set on the task.

The Kuwaitis also say that with planned expenditures of $8 billion to $10 billion over two years, they will further raise output to 2 million barrels a day by the end of 1993.

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