OPEC output up 250,000 barrels per day in March: Survey

Continued high oil prices ensured that OPEC crude production rose again in March with overall output climbing 250,000 bpd to 29.83 million barrels per day (mmbpd) from 29.58 mmbpd, a Platts survey of OPEC and oil industry officials showed Thursday.

Production by the ten members with quotas -- Iraq does not have one -- also rose 250,000 bpd, to 27.98 mmbpd from 27.73 mmbpd in February.

The survey showed that OPEC-10 production in March exceeded by around half a million barrels per day the new 27.5-mmbpd ceiling agreed at the group's March 16 meeting in Isfahan, Iran, when ministers adopted a Saudi proposal for an immediate 500,000 bpd increase, and was already within a whisker of the 28 mmbpd that will be the group's new ten-member ceiling if a further 500,000 bpd increase currently under discussion is implemented.

"Not all barrels are equal, and while the world certainly needs the additional output from OPEC, the increase is almost certainly close to 100% sour barrels," said John Kingston, global director of oil at Platts. "These crudes generally have a lower gasoline yield, which is less favorable for the market as we move into the heavier gasoline demand season. So the increase will certainly be welcomed by consumers, but these barrels are going to sell for less than $50, and there's a reason for that."

OPEC kingpin Saudi Arabia, which boosted its output by 150,000 bpd to 9.4 mmbpd, provided the biggest single output increase in March. Iranian output rose by 50,000 bpd to 3.98 mmbpd. Other smaller increases totaling 110,000 bpd came from Algeria, Kuwait, Libya and Venezuela. Nigerian, Qatari and UAE production were unchanged from February levels. Indonesian production drifted down to 950,000 bpd. Iraqi output was roughly unchanged at 1.85 mmbpd.

OPEC's steadily rising production means that most member countries are moving close to their output capacity limits, with only Saudi Arabia -- which says it is capable of producing 11 mmbpd but that the market does not currently need this much oil -- having any significant volume of surplus capacity. Indeed, the survey shows that Indonesia and Venezuela are jointly under-producing their new output quotas by close to 1-mmbpd.

Unwilling to tackle the highly political issue of quota redistribution, OPEC has continued to apply any output adjustments on a pro rata basis, a policy that has resulted in Indonesia's March output averaging out at 475,000 bpd below its new 1.425-mmbpd quota and Venezuelan output 465,000 bpd below its 3.165 mmbpd quota. An additional 500,000 bpd hike in the ceiling will make the disparity even more glaring for those two countries.

OPEC president and Kuwaiti oil minister Sheikh Ahmed Fahed al-Sabah said April 4 he had already initiated consultations with other OPEC ministers on whether to implement the 500,000 bpd additional increase provided for by the Isfahan meeting. Sheikh Ahmed said it was his personal view that OPEC should go head with the increase as soon as possible. International oil prices climbed to new all-time highs Monday, when US light crude futures soared to $58.28/barrel and North Sea Brent to $57.65/barrel but have since eased back to between $56 and $57/barrel. (*)

Country	Mar05	Feb05	Jan05	Dec04	Nov04	Quota	OldQuota
Algeria	1.300	1.290	1.290	1.290	1.280	0.878	0.862
Indonesia	0.950	0.960	0.960	0.960	0.950	1.425	1.399
Iran	3.980	3.930	3.900	3.900	3.950	4.037	3.964
Iraq	1.850	1.850	1.850	1.840	1.800	N/A	N/A
Kuwait	2.450	2.430	2.400	2.420	2.420	2.207	2.167
Libya	1.620	1.610	1.610	1.630	1.610	1.473	1.446
Nigeria	2.350	2.350	2.300	2.280	2.380	2.265	2.224
Qatar	0.780	0.780	0.780	0.800	0.800	0.713	0.700
Saudi	9.400	9.250	9.100	9.500	9.500	8.937	8.775
Arabia UEA	2.450	2.450	2.400	2.480	2.480	2.400	2.356
Venezuela	2.700	2.680	2.700	2.650	2.650	3.165	3.107
Total	29.830	29.580	29.290	29.750	29.820	N/A	N/A
Opec10 (excluding Iraq)	27.980	27.730	27.440	27.910	28.020	27.500	27.000