CONFIDENTIAL5. THE MEETING ALSO DISCUSSED MARKER CRUDE AND LEFT OPEN THE WHOLEQUESTION OF DIFFERENTIALS, THE VOTE WAS NOT FOR A PERCENCERISE BUT FOR THE FIGURE OF DOLLARS 1.19 ON 1 JANUARY ON MEPOSTED PRICE.
6. THE JOINT UAE/SAUDI POSITION IS EXTREMELY COMPLICATED, ANDHAS BEEN GIVEN NO THOUGHT BY EITHER PARTY, YAMANI LEFT QATARSIMPLY SAYING THAT THE DIFFICULTIES WOULD HAVE TO BE RESOLVED LATER,MAN I WAS TOLD OF THESE DIFFICULTIES AND PROBABLY DID NOT UNDERSTAND THEM. IN BRIEF THEY ARE:
1. THE 5% INCREASE DECIDED UPON BY SAUDI AND UAE WAS NOT DEFINED,IT IS NOT KNOWN WHAT FIGURE IT IS A PERCENTAGE OF.
11. NO DISCUSSION WAS GIVEN TO HOW JOINTLY OWNED FIELDS PRICETHEIR OIL. QATAR HAS ALREADY BEEN IN TOUCH WITH ABU DHABI ABOUTTHE BUNDUQ FIELD, BUT IT IS TO BE PRESUMED THAT KUWAIT WOULD HAVERAISED A SIMILAR TOPIC WITH SAUDI ARABIA OVER THEIR JOINTLY OWNEDFIELDS.
111. MURBAN CRUDE, THE BEST IN THE GULF, IS NOW APPARENTLY
CHEAPER THAN KUWAIT HEAVY, MARKET PRESSURES WILL CERTAINLY FORCEUP THE PRICE OF MURBAN, IF THIS PRICE IS NOT PAID TO ABU DHABI,PROFIT WILL BE MADE BY MIDDLEMEN, THE CONSUMER WILL NOT BENEFIT.
IV. ADNOC'S EQUITY CRUDE MAY BE SUBJECT TO PRICE CONTROL, ALTHOUGHTHIS WOULD BE DIFFICULT BECAUSE OF KROUHA'S POSITION. THE OPERATING COMPANIES WILL PRESUMABLY SELL FOR WHAT THEY CAN GET.
V. NO THOUGHT HAS BEEN GIVEN TO THE EFFECT ON LONG--STANDINGCONTRACTS, WHICH IN THEORY WILL ENABLE THOSE WHO SIGNED THEM TOMAKE VERY SUBSTANTIAL PROFITS ON THE MARKET.
7. PRIVATELY, YAMANT SAID THAT SAUDI EXISTING CAPACITY WAS
11.8 MBPD, AND THAT THIS FIGURE COULD BE REACHED WITHIN A MONTH(REPRESENTING AN INCREASE IN PRODUCTION OF ABOUT 2.5 MILLION BPD).HE REALISED THAT IF THIS TACTIC WAS TO BE SUCCESSFUL, IT HAD TOBE USED WITHIN THE FIRST QUARTER OF 1977, WHEN DEMAND WOULD BEAT ITS LOWEST. HOWEVER, IT IS THOUGHT THAT THE SAUDIS REAL
PRESENT CAPACITY IS 11.2MBPD, AND THAT THIS COULD ONLY BE ACHIEVEDAFTER SIX MONTHS, ARAMCO HAVE BEEN CONSISTENTLY DENIED THE CHANCE
CONFIDENTIAL
