* OPEC holds informal talks to raise call on allies
* OPEC wants non-OPEC to cut 500,000 bpd out of 1.5 mln bpd
cut
* Russia, Kazakhstan say not yet on board for bigger cuts
* Oil price slide hits OPEC members' budgets hard
* Virus outbreak has hammered crude demand outlook
(Adds statement from OPEC after informal meeting)
By Ahmad Ghaddar, Shadia Nasralla and Rania El Gamal
VIENNA, March 5 (Reuters) - OPEC pushed on Thursday for a
bigger-than-expected oil output cut to support prices that have
been hit by the coronavirus outbreak, effectively presenting its
non-OPEC partners with an ultimatum to back the move or face a
price collapse.
OPEC's proposal to curb supplies by an extra 1.5 million
barrels per day (bpd) until the end of 2020 was a surprise,
given the group was expected to propose cuts of 1 million bpd
and, hours earlier on Thursday, had said curbs should be limited
to the second quarter.
But an unusual informal meeting of OPEC ministers in a
Vienna hotel on Thursday evening announced that the group now
wanted the cut - already the biggest since the 2008 financial
crisis - to run until the end of year.
Russia and Kazakhstan, both members of the broader grouping
known as OPEC+ which meets in Vienna on Friday, said they had
not yet agreed to a deeper cut, raising the risk of a collapse
in cooperation that has propped up crude prices since 2016.
OPEC+ already has a deal in place for 2.1 million bpd of
cuts.
OPEC said after Thursday's formal ministerial meeting that
the market faced an "unprecedented situation" as efforts to stop
the coronavirus spreading has driven down demand for oil by
dampening economic activity around the world. Riyadh, OPEC's biggest producer, has been pushing for a
significant cut to lift oil prices that have tumbled 20% since
the start of year. But it has struggled to win over Moscow.
Russian Finance Minister Anton Siluanov said on Thursday he
was ready for a drop in oil prices if there was no deal. Kazakh
Energy Minister Nurlan Nogayev, another non-OPEC producer, said
talks were only focusing on extending existing curbs to June.
"Moscow perhaps is underestimating that Saudi Arabia may be
ready to walk away if it doesn't get a positive answer," said
Amrita Sen, co-founder of Energy Aspects think-tank.
'IN THIS TOGETHER'
Russia has been hesitant in previous negotiations and has
then signed up to deals at the last minute. But OPEC sources
have said negotiations with Moscow this time have been tougher.
Two OPEC sources said on Thursday that, if Russia failed to
sign up, there was a risk Saudi Arabia would insist on scrapping
OPEC production limits altogether.
After its formal ministerial meeting, OPEC ministers had
said non-OPEC states were expected to contribute 500,000 bpd to
the overall extra cut.
Suhail al-Mazroui, energy minister of the United Arab
Emirates, said OPEC did not want to carry the burden of cuts
alone and non-OPEC had to help. "We are all in this together. So
it's not going to be us making a decision alone," he said.
Saudi Arabia, the world's top oil exporter, is already
cutting well beyond its quota under the existing pact, reducing
its output by about 10%. Russia, with bigger total production,
has reduced its output by a fraction of Riyadh's cut.
Gary Ross, founder of Black Gold Investors, said a worst
case scenario in which Saudi Arabia returned to full production
would send oil prices down to $25 to $30 a barrel.
That would take prices to a level that would be painful for
OPEC states, already struggling with prices at around $50, but
also for Russia, which has said it can balance its books at $40.
"OPEC+ have little choice but to cut output substantially
given the virus related demand losses," Ross said, adding that
he expected Russia "will join because it is overwhelmingly in
their economic interests."
Brent oil prices LCOc1 initially rose 0.6% on news of
OPEC's plan to cut by 1.5 million bpd, but then gave up most of
those gains when Russia and others suggested a deal was not in
the bag.
The proposed OPEC cut of 1.5 million bpd, if approved, would
bring the group's overall output reduction to 3.6 million bpd or
about 3.6% of global supplies.
The last time OPEC reduced supplies on such a scale was in
2008 when it cut production by a total of 4.2 million bpd to
address slower demand because of the global financial crisis.
OPEC hold its next ministerial meeting on June 9.