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Nudging OPEC members into line

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Dr. Mana Saeed al-Otaiba, the United Arab Emirates oil minister, faced a difficult problem on his return from the OPEC meeting in Vienna last March.

Because of the continuing sluggish demand for OPEC oil, the Organization of Petroleum Exporting Countries agreed to establish a 17.5 million-barrel-a-day production quota for the organization. The U.A.E.'s quota was 1 million bpd.

That would mean paring back almost 400,000 bpd of U.A.E. oil production to help dry up the glutted oil market.

Dr. Otaiba's problem of cutting U.A.E. production was compounded by the fact that under the Emirates' provisional constitution of 1971, each emirate retains complete control over its own mineral resources.

Though Dr. Otaiba's title is oil minister, the only emirate where he has complete control of oil production is Abu Dhabi.

The other two oil-producing emirates - Dubai, with 350,000 bpd, and Sharjah, with about 10,000 - determine their own production.

Thus, Dr. Otaiba, who is chairman of the OPEC production monitoring committee , had three main options. He could simply ignore his limit; he could order the entire 400,000 bpd cut from Abu Dhabi production (then at just over 1 million bpd); or he could divide the cut equitably among the three oil-producing emirates.

That was several months ago. Today, all that is known is that production figures are no longer published for Abu Dhabi, and the productions of Sharjah and Dubai have continued at the same levels.

Estimates place Abu Dhabi's production at about 850,000 bpd, down from more than 1 million before the OPEC quota. Total U.A.E. production in November was estimated at 1.2 million bpd, or about 200,000 barrels over the quota.

When asked about this, Dr. Otaiba said: ''We have a quota of 1 million barrels a day and we are producing 1 million barrels a day.'' He added, ''I am not only the oil minister of the U.A.E., I am also the chairman of the Ministerial Monitoring Committee, and if I felt there was something wrong here I would be the first to adjust it.'' He called reports of U.A.E. overproduction ''speculation.''

The quota was established in response to low demand for OPEC crude, which had fallen from 32 million bpd in late 1979 to 16 million bpd in May 1982.

And then, to compete in the weak market, several OPEC members began to sell below the set OPEC price and to produce over their assigned quotas. They were doing this largely to compete with North Sea crude and Mexican crude, both of which were being produced at high levels and sold below OPEC prices.


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