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December 23, 2009

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Opec maintains output quotas

OPEC kept its output quotas unchanged yesterday and the producer group called for greater compliance from some members whose overproduction could undercut efforts to support prices amid a fragile global economic recovery.

The announcement by delegates representing several of the Organization of the Petroleum Exporting Countries' members reflected the producer group's cautious approach to balancing the market this year - at once dealing with weak demand and an oversupply while trying to sustain the rebound in prices. In the end, the 12-member group decided that no action was the best action in a market where the pace of the world's recovery from its worst recession in decades remains uncertain.

"No change," said Shukri Ghanem, head of Libya's National Oil Corp and the North African nation's de facto oil minister, following yesterday's brisk meeting in the Angolan capital, Luanda.

But Ghanem stressed that the group which supplies more than a third of the world's crude was unhappy with how some members have exceeded their production limits.

"Yes, we are talking about compliance. We are calling for member compliance," Ghanem said.

The decision to hold quotas steady was widely expected. A decision to change output may not only have undermined the economic recovery, but would also have likely undercut the bloc's credibility given its compliance with its quotas is around 60 percent.

"Compliance is a function of sovereign rights, and sovereign rights are sovereign rights," Saudi Arabian Oil Minister Ali Naimi said, adding that it was "nothing new" for some members to be overproducing. Even so, "we'd like it to be 100 percent," Naimi said.


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