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Financial Times: Opec unites against Venezuelan rhetoric

By Carola Hoyos and Andy Webb-Vidal in Caracas
Published: June 1 2006 17:23 | Last updated: June 1 2006 23:47

Hugo Chávez, Venezuela’s populist president, on Thursday angered Opec ministers with anti-US rhetoric as they united against him in rejecting his call to cut the oil cartel’s production.

Overcoming Venezuelan objections, the Organisation of the Petroleum Exporting Countries, at a meeting in Caracas hosted by Mr Chávez, decided to keep pumping at nearly maximum capacity. Opec produces 30m barrels a day of oil, about 40 per cent of the world’s total output. Earlier this week Venezuela called for a cut in Opec production of 500,000 to 1m b/d.

“We are third world countries, nations that have suffered colonialism for years, we are countries that are condemned by much more powerful states,” Mr Chávez told the meeting. “The US president is a danger for the world,” he said, echoing his regular criticism of US foreign policy.

Opec ministers did not criticise their host openly. Shokri Ghanem, Libya’s energy minister, said: “The most important thing in life is to listen, not necessarily to agree.”

Saudi Arabia, the world’s biggest oil producer, has led the cartel’s efforts to counter attempts by Venezuela and Iran to use Opec as a tool against the US, Opec’s biggest customer. Venezuela backed the idea of selling oil in euros instead of in dollars, a proposal which was supported by Iran but rejected by other members.

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

Using Opec to further his cause of oil nationalism, Mr Chávez backed Bolivia to join the group as an observer member, and Ecuador, a member from 1973-1992, to rejoin as a full member. Both South American countries have moved to wrest more control of energy from international companies.

Joseph Stanislaw, president of 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 maximise their resources revenue.”

Pushed by Nigeria, Opec’s biggest African member, Angola and Sudan are also considering joining the group. The two sub-Saharan countries together produce more than 1.5m barrels of oil a day. International oil companies have invested billions in Angola and oppose its membership.

If oil prices fell and Opec decided to reduce its quota level, Angola would have to ask oil companies to forgo revenues. Sudan would have to do the same to the Chinese groups that dominate its industry.

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