OPEC keen to make oil cut, avoid quota fight

DOHA, Oct 18 (Reuters) OPEC ministers' shared determination to cut oil supplies and halt a steep drop in prices may silence squabbles over market share when the group meets here on Thursday, delegates say.

In the two weeks since a plan to remove 1 million barrels per day (bpd) was made public, producers have failed to agree on how to share out the reduction, OPEC's first since April 2004.

To sidestep the issue of quotas, at a special meeting on Thursday OPEC may present the cuts as voluntary or temporary -- releasing only a list of individual cutbacks, OPEC sources said.

Iran and Venezuela, struggling to meet their quotas, do not favour a cut based on actual supply that would see them losing ground, delegates have said. But most in OPEC say a reduction must come from real output to be credible.

''OPEC wants to reflect the reality on the ground by making a cut in actual supply,'' said a Gulf oil expert. ''But to avoid antagonising Iran and Venezuela, the ministers could announce a deal on the 1 million cut without going into specifics.'' Even before arriving in Doha, Venezuela announced on Wednesday it would curb supplies by 100,000 bpd -- doubling a token cut initially made from October. It is the only OPEC country to join Nigeria in going public with voluntary cuts.

It is a delicate time for OPEC to rein in production with oil prices still at historically high levels near a barrel.

Oil has trebled since the start of 2002.

But nagging at all OPEC members is a 25 percent drop in oil prices since a mid-July peak of .40 for U.S. crude, high fuel stocks in consumer countries and slowing demand for its oil.

''OPEC's message is simple and clear. We are monitoring the market and will defend a price of for the OPEC basket,'' said an OPEC delegate, referring to the basket of OPEC oil that trades roughly a barrel below U.S. oil.

''For now, we believe a 1 million cut will do the job.'' Analysts say, however, the group that pumps more than a third of the world's oil may have to remove more crude when it gathers at its next scheduled meeting in Nigeria on Dec. 14.

OPEC's official ceiling has been at 28 million bpd since July 2005 and during that time output has shifted around one million barrels either side.

MARKET SHARE DEBATE To reward those who have spent billions to boost production -- such as top exporter Saudi Arabia and Algeria -- OPEC President Edmund Daukoru has devised a formula for the 1 million bpd cut based on real output averaged over the past 12 months.

Most member countries have been pumping at -- if not well beyond -- their quotas for more than a year. But Indonesia and Venezuela have fallen well below theirs and Iran has had difficulty matching its limit due to declines in capacity.

The difference between a cut from the group's official 28 million bpd ceiling and some 27.856 million bpd in actual supply is negligible.

But even a small loss in market share for Caracas and Tehran could bruise national pride and cost them business in the long run. They are also loath to lose out to those pumping in excess of quotas to satisfy demand.

The OPEC president, who is also Nigeria's Minister of State for Petroleum Affairs, has said he does not want to raise the issue of quotas in Doha.

''If we start debating quotas now, we will not be able to respond fast enough,'' he told Reuters at the weekend. ''None of what we are doing is to make a permanent arrangement.'' A senior OPEC delegate has spoken of producers cutting their ''fair share'' from the organization's actual production. This would be tantamount to reassigning quotas.

''Libya is keen to see OPEC's meeting concluding a deal on quotas that would be fair of all of us,'' Libya's top energy official Shokri Ghanem said.

REUTERS DKS HS1947