Norway OKs oil output cut

November 22, 2001 Posted: 1751 GMT

NEW YORK (CNN/Money) -- Oil prices rose Thursday in London after Norway agreed to cut oil production by 100,000 to 200,000 barrels a day in response to pressure from OPEC, which is attempting to stem a steep slide in world prices.

The reduction will take effect Jan. 1, provided that members of the Organization of Petroleum Exporting Countries fulfill their previous pledges to cut production and other nonmembers do their part as well, said Norwegian oil and energy minister Einar Steensnaes.

The cut would be made from estimated production of 3.2 million barrels a day from Norway's offshore oil fields next year, Steensnaes said.

Brent crude futures for January delivery rose $1.18 to $19.91 a barrel Thursday, $3 over Monday's two-year lows.

OPEC agreed last week to slash 1.5 million barrels per day (bpd) from its oil export quotas from Jan. 1 -- its fourth cut in a year – only if rival exporters Russia, Mexico, Norway and Oman chipped in with a 500,000 bpd reduction.

OPEC Secretary-General Ali Rodriguez said he was confident of achieving a deal with non-OPEC exporters to cut global oil supply.

"I am confident of an agreement," Rodriguez said, adding that the 11-member cartel would await an official response from other producers before triggering another wave of OPEC cuts.

If a deal goes ahead, OPEC's Rodriguez expected prices to reach the lower end of OPEC's preferred $22-$28 per barrel band, from $17.44 on Wednesday.

While Steensnaes would not name a specific target for what Norway thinks the oil price should be, he said OPEC's price band target "is not sensible at the moment."

So far, Mexico has promised a cut of 100,000 barrels on the condition that OPEC comply with its promise Jan. 1, and Oman could help out with 25,000 barrels.

Russia, which recently passed Norway to become the world's second-largest oil exporter, has only committed itself to a symbolic cut of 30,000 barrels, a small portion of its total production of 7 million barrels a day.

"It is very important that Russia follow up efficiently," Norway's Steensnaes told reporters, adding that he would be in contact with officials in that country by Friday.

The vice president of Russia's largest oil company, LUKOIL, said Thursday the government was likely to cut oil output to support the market.

"We think the government will take a decision to cut output in volumes enough to stabilize the market," Leonid Fedun was quoted by Interfax news agency.

LUKOIL and other producers would meet the government Friday for further talks about possible cuts in output or exports of crude.

Mikhail Khodorkovsky, the head of Russia's second-largest oil company, YUKOS, said he believed a decision to suit both OPEC and independent producers could be found.

--from staff and wire reports