UPI Energy Watch

Oil prices fall on OPEC decisions

Despite calls from some members to further cut oil production, the Organization of Petroleum Exporting Countries decided not to change its output at its Sunday meeting in Vienna.

Instead, the cartel wants its members to fully comply with the cuts it has already made over the last year, especially the 4.2 million-barrels-per-day cut agreed upon in December, The Times of London reports.

OPEC leaders agreed to meet a target production of 24.8 million bpd. To do that, the cartel has to cut out about 800,000 bpd that is contributing to the current oil surplus.

Abdalla Salem el-Badri, OPEC's secretary-general, said compliance with cuts "will reduce the overhang" of oil in the market.

"If we have more compliance, we can reduce (the overhang) further," he said. "We've called another meeting in May. If something happens between now and May, we will have to correct the market in May."

Some OPEC members, including Iran and Venezuela, continue to call for additional cuts to increase oil prices.

Saudi Arabia said it believes $75 is a good target price for a barrel of oil.

Though it is not a member of OPEC, Russia said it will observe the cartel's meetings and wants to cut its oil production to help OPEC's effort to increase oil prices.

Russian Deputy Prime Minister Igor Sechin promised to join in any additional production cuts. He said Russia already cut its production 1.9 percent in January.

Occidental signs historic oil deal in Bahrain

U.S.-based Occidental Petroleum Corp. has signed an agreement with Bahrain's National Oil and Gas Authority to work on the Bahrain Field Phased Development Project.

Abu Dhabi's sovereign wealth fund Mubadala is also part of the agreement to help Bahrain meet its goals of increasing its oil and gas production, Gulf Daily News reports.

"This cooperation between Oxy, Mubadala and NOGA will result in significantly increasing the daily oil and gas production levels and at the same time add many hundreds of millions of oil barrels and trillions of cubic feet of natural gas to the reserves of the Bahrain Field," said Abdulhussain Mirza, Bahrain's oil and gas affairs minister and the National Oil and Gas Authority chairman.

Brunei settles territory dispute

Brunei dropped its claim over Sarawak's Limbang district, ending a long dispute over oil-rich land and sea territory.

"Brunei has decided to drop the Limbang issue, and as a result, Limbang is part of Malaysian territory," said Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi.

One of the disputes was a question over the rights to oil deposits in the disputed maritime territory, the Malaysia's Star newspaper reports.

The dispute began in the 1890s, and the negotiations began in 1995.

The last incident was in 2003, when Malaysia and Brunei awarded petroleum production-sharing contracts to four exploration blocks in the disputed area.

Petronas awarded its two blocks to U.S. oil firm Murphy Oil while Brunei awarded one of its blocks to Total, BHP Billiton and Hess Corp. and the other to Shell, Mitsubishi and ConocoPhillips.

That dispute ended oil drilling in the area.

A commercial arrangement area was agreed upon where oil and gas revenue in the disputed area would be shared between the two countries.

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Closing oil prices, March 16, 3 p.m., London

Brent Crude oil: $44.69

West Texas Intermediate crude oil: $45.38

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(e-mail: energy@upi.com)