High hopes on OPEC summit in Caracas

High hopes on OPEC summit in Caracas

By Emilio Rappold

CARACAS (DPA): "They are all just a heap of Pinocchios," a
former Venezuelan oil minister said of his OPEC colleagues.

They had a tendency to set oil-production quotas at OPEC
meetings on Sept. 27-28, then turn around and produce well above
those levels. The resulting lower oil prices, together with the
world's decreasing dependence on oil, combined to drive the
Organization for Oil Exporting Countries (OPEC) into obscurity
after the energy crises of the 1970s.

However, shortly before last week's OPEC summit, the second in
the cartel's 40-year history, surging world oil prices have put
OPEC once again in the world's spotlight, a position it hopes to
cement at its meeting Wednesday and Thursday in Venezuela's
capital.

Current price developments are expected to be discussed only
on the fringes of this week's summit because the meeting is seen,
instead, as an opportunity -- in the words of Venezuelan
President and "summit father" Hugo Chavez -- for this heap of
Pinocchios to establish "true unity and importance".

Chavez, a former putschist and left-leaning nationalist who
regularly campaigns against "wild capitalism", envisions OPEC
unity as transcending oil production and extending to relations
between OPEC members.

At the summit, Chavez said he would like OPEC to take a stand
"against embargoes of all kinds and against the one-sided mixing
in internal affairs of other countries". However, he has also
called for OPEC to support the Palestinians.

He also wants OPEC to begin discussions on alternative energy
sources.

This week's summit will also present an opportunity for OPEC
to grow beyond its current 11 members. Brazil has announced that
it wants to join at the latest by 2010. It -- along with Russia,
Mexico and Norway -- will attend the summit as observers, and
Russia is also expected to announce, possibly in Caracas, its
intentions to join soon, said summit organizer Jorge Valero,
Venezuela's deputy foreign minister.

But Chavez's vision of an OPEC that remains politically
powerful through oil-price fluctuations might be more than
wishful thinking.

Its share of world oil production has fallen from two-thirds
in the 1970s to 40 percent today, and conflicts between OPEC
countries, like Iraq and Kuwait and Iraq and Iran, have received
a lot of press.

In addition, OPEC has to not only shake loose of its Pinocchio
image but also of its "bad boy" stereotype left over from the
1970s, when it imposed embargoes and price increases -- some as
large as 70 percent and 130 percent -- aimed at Israel's Western
supporters.

OPEC has rejected the recent accusations, warnings and
protests directed at it over rising oil prices. OPEC President
and Venezuelan Energy Minister Ali Rodriguez said recently that
it is the least responsible for price hikes that have driven oil
prices up from US$15 per barrel in mid-1999 to last week's 38
dollars a barrel.

He said recent market speculation alone had increased the
price by $8 per barrel. He also pointed his finger at high
national taxes on petroleum, transportation and refinery
problems.

Rodriguez added, however, that OPEC couldn't rule out another
production increase of 500,000 barrels per day. That increase
could be decided upon at OPEC's November meeting "if the price
doesn't sink within the wished-for range of $22 to $28 (per
barrel) for at least 20 days in a row", he said.

He said OPEC wants to avoid a price war and that he was
convinced that oil prices would drop in October, when an
additional 800,000 barrels per day will hit the market as a
result of OPEC's decision two weeks ago to increase its
production.

However, the agenda for the nine heads of state at the summit
-- Iraq's Saddam Hussein and Libya's Muammar Qaddafi will not
attend on "security grounds -- will not be current price
developments, rather the laying of a cornerstone for "long-term
stable and fair prices", Valero said.

OPEC has yet to produce any concrete suggestions for achieving
that aim, along with Chavez's vision of OPEC's transformation
into a global powerbroker. And unlike Pinocchio, it will to do
more than wish upon a star.