Military

DATE=10/30/03

TYPE=CORRESPONDENT REPORT

TITLE=OPEC/OIL (L-O)

NUMBER=2-309225

BYLINE=MELANIE SULLY

DATELINE=VIENNA

CONTENT=

VOICED AT:

INTRO: The Organization of Petroleum Exporting Countries says it will cut production later this year if the price of oil continues to drop. The statement by the OPEC secretary general comes along with a prediction that there will be more oil on the world market than needed next year. Melanie Sully reports from OPEC headquarters in Vienna.

TEXT: OPEC secretary general, Alvaro Silva-Calderon, told reporters the market is more than well supplied, and could be over-supplied next year if production is not reduced further.

Last month the cartel made the surprise decision to cut production by 900-thousand barrels per day, effective November first, to keep prices in the preferred band of 22- to 28-dollars per barrel.

According to OPEC, the average price this year is almost 28-dollars per barrel, but the price dropped more than a dollar a barrel in the past two days, to less than 27-dollars a barrel.

Mr. Silva-Calderon says OPEC ministers will meet again in December to review the situation.

/// CALDERON ACT ///

We need to wait for a period, in this case a short period of a month in order to take the appropriate decision. The big concern will be not high prices, but low prices.

/// END ACT ///

Mr. Silva-Calderon forecasts there will be, as he put it a lot of oil on the market in 2004. He says OPEC wants to avoid prices slumping to as low as 10-dollars per barrel, as they did in 1998.

Analysts say the issue of cooperation from non-OPEC oil producers such as Russia, Norway, and Mexico will be discussed at OPEC's December meeting.

Mr. Silva-Calderon is traveling to Moscow next month to discuss Russian co-operation with OPEC. (SIGNED)

NEB/MS/AWP/RAE