MercoPress. South Atlantic News Agency

OPEC rejects Venezuelan call to cut output

Ministers of the Organisation of the Petroleum Exporting Countries, the oil cartel, on Thursday united against Venezuela to reject its call to cut the group's production.

The vast majority of the 11 delegates meeting in Caracas on Thursday said they were set to agree to keep pumping at nearly maximum capacity. Opec produces 30m barrels a day of oil, about 40 per cent of the world's total.

Saudi Arabia, the world's biggest oil producer, led the cartel's efforts to counter Venezuela and Iran's attempts to use Opec as a tool against the US.

Oil prices are at near record highs and a reduction in Opec's production would have led to a further rally, analysts said. They warned that this could have undermined world economic growth and pushed up inflation.

Hugo Chavez, Venezuela's populist president, has tried to use Opec to spread his anti-Washington message and to push energy nationalism.

One way he has done this is to back Bolivia to join Opec as an observer and Ecuador, which was a member of the group from 1973-1992, to rejoin as a full member. Both countries have recently moved to wrest more control of their energy assets from international companies. Bolivia in March sent its military to take over its gas fields.

Mr Chavez, in addressing Opec ministers, said: "We are third world countries, countries that for years and years have suffered colonialism, countries that are condemned by much more powerful states."

He added: "The life of our organization has not been easy. We are under an unfair way of exploitation. Oil is the reason of the permanent aggression of the US empire. Oil did not benefit the Venezuelan people while the US empire was drinking our oil," Mr Chavez said.

Like a tenor reaching the climax of his aria, Mr Chavez grew more and more animated: "Opec is a liberator of countries in Asia, Africa, Latin America and the Middle East," he concluded.

Rafael Ramirez, Venezuela's energy minister said: "The stability of our countries is in danger because of the terrorism from states that want to take our oil reserves."

The faces of other Opec ministers revealed their unease with such inflammatory rhetoric. Saudi Arabia, especially, has tried to stop Venezuela from hijacking the meeting to push its nationalist cause and its spread its criticism of the US, Opec's biggest customer. Many Opec countries do not consider themselves third world nations.

Joseph Stanislaw, president of the J A Stanislaw group, the consulting firm, said: "The enlargement of Opec is a natural extension of the energy nationalism we see in the world today. The high prices are encouraging every oil-rich country to find ways to maximize their resources revenue." He added: "The US government will not be pleased with this at all."

Pushed by Nigeria, Opec's biggest African member, two Sub-Saharan countries are also considering joining the group. Angola and Sudan, which together produce more than 1.5m barrels of oil a day, have both said they are mulling becoming members.

Desiderio da Graca Verissimo e Costa, Angola's energy minister, on Thursday confirmed the FT's story that Angola was thinking of joining Opec and that the matter would be taken up by the country's council of ministers. He said: "I think for all oil producing countries it would be good to join Opec."

Sudan, which produces about 360,000 b/d, and Ecuador, which exports only small quantities of oil, have also confirmed they were considering joining Opec. Meanwhile, Venezuela is pushing Opec to accept Bolivia, which does not export oil, as an observer nation.

International oil companies have invested billions of dollars in Angola and oppose its membership. If oil prices fell and Opec decided to reduce its quota level ? which dictates the amount its members may produce ? Angola would have to ask oil companies to forego production and revenues. Sudan would have to do the same to the Chinese national oil companies that dominate its industry.

But analysts warn that enlarging Opec could in fact weaken the group, especially if Angola and Sudan - possibly under pressure from international oil companies and China - refused to adhere to the group's policy decisions. Roger Diwan, analyst at PFC Energy, the consulting firm, said: "The more you get at the table, the more difficult decisions become. When the day comes top cut production it is likely to complicate things because we don't know whether these countries will in fact be willing to reduce production and abide by Opec's quota policy." (FT)