Venezuelan President takes OPEC lead as oil price booms

Cahvez

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CARACAS (Reuters) -- Whether the OPEC oil cartel wanted a leader or not, it has one now in the self-styled revolutionary Venezuelan President Hugo Chavez.

The South American leader took the 11-member oil exporters' club by storm on a whirlwind nine-day tour ending on Tuesday, slapping backs from Tripoli to Baghdad, where he became the first elected leader to visit Iraqi leader Saddam Hussein in a decade.

Undeterred by political and religious differences that have kept the fractious cartel feuding for most of its 40-year life, Chavez invited all 10 fellow leaders to Caracas next month for OPEC's first summit for heads of state in 25 years.

MESSAGE BOARDS Rising oil prices

The flamboyant former paratrooper wants to build on the biggest oil boom since the 1980s to lift the political profile of a cartel that controls two-thirds of the world's oil reserves and exports.

But behind the red-carpet protocol, it was unclear how warm a reception the former failed coup leader met in the conservative desert kingdoms of the Gulf.

In Saudi Arabia, the world's top exporter and OPEC kingpin, Chavez was feted by King Fahd with a state banquet, but the kingdom issued a bland statement about seeking price stability, in sharp contrast to Chavez's hawkish rhetoric.

Only half the leaders agreed to come to the Caracas summit Sept. 27-28 -- some claiming sickness, others citing security concerns or nursing Gulf War vendettas -- but the tour provided Chavez with a global stage to preach his Third World revolutionary philosophy.

Recalling former U.S. President Ronald Reagan's phrase that the West had brought OPEC to its knees in the 1986 oil price crash, Chavez said "we must never allow ourselves to fall on our knees again."

He said a $7 barrel of oil -- the price of Venezuelan crude exports in February 1999 when he took office -- was a death sentence for OPEC, and backed the group's $22-$28 target price band.

"OPEC is not the devil that the developed countries try to make the people of the world believe. What we want is a fair price -- not high but fair," he said in Nigeria.

As he spoke, world oil prices simmered at $30 per barrel, their highest level in a decade, prompting shrieks of pain from the world's biggest importer, the United States.

Washington took a swipe at Chavez for his Iraq trip, calling it a "dubious distinction" to be the first democratically elected leader to visit Saddam since he invaded fellow OPEC member Kuwait in 1990.

Chavez responded in typically combative style: "If I want to go to hell and talk to the devil himself, even if just to smell the sulphur, I will do so because we are free and sovereign and don't need anyone to tell us where to go."

Industry analysts said Chavez's attempt to unite the fractious cartel could prove counter-productive.

"I think the worst thing for OPEC unity and the defence of our economic interests is to involve OPEC in political matters," said former Venezuelan Energy and Mines Minister Humberto Calderon, who was OPEC president in 1979-1980.

"The only reason OPEC has lasted so long is that it has kept out of politics," he added.

Not only is OPEC still bitterly divided over Iraq, but most members have left behind the anti-Western rhetoric of the 1970s, when OPEC threw the developed world into recession with a $40 barrel of oil.

Saudi Arabia, which has been home to thousands of U.S. troops since the 1991 Gulf War, sees oil-consuming nations as valuable customers and favours a $25 per barrel price that ensures growing demand for oil.

Under U.S. pressure, the kingdom broke ranks with the rest of the cartel in July and raised output above its quota in the hope of cooling prices, although the move never was officially admitted.

For Chavez, who converted OPEC's worst quota buster into the most compliant member when he took power in February 1999, compliance is a matter of principle.

"Saudi Arabia is respecting its quota, contrary to what has been reported," he told journalists in Algeria.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Organization of the Petroleum Exporting Countries
Citgo Corporation
Petroleos de Venezuela, S.A.: The National Oil Company of Venezuela (Spanish, available in English)
Presidencia de la Repœblica de Venezuela (Spanish)
U.S. Energy Information Administration
  •  Venezuela Energy Profile
  •  Algeria Energy Profile
  •  Libya Energy Profile
Petroleum World: Venezuela Oil and Gas
Regional Association of Oil and Natural Gas Companies in Latin America and the Caribbean
U.S. National Council for Science and the Environment
  •  Issue Brief: World Oil Production After Year 2000

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