OPEC and the Summit 2000

OPEC and the Summit

Hugo Chávez Frías, President of the Bolivarian Republic of Venezuela... an exclusive.

History, at least in Venezuela, is not about to end; on the contrary, important and promising choices are opening up. Our people, yearning for justice, are resisting conformity and atavistic fatalism. They are preparing, with all their strength, for a new and intense struggle for their own future and a more humanitarian future for all the peoples of the planet.

In recent months, despite inevitable political, economic and even natural difficulties, Venezuela has been witness to the arduous task we have set ourselves to give this country its true international dimension, to create an integral image of solidarity with our brothers of the South, to reaffirm our responsibility as a supplier of energy and, above all, to affirm our position of peace and good will, never indifferent to the serious injustices and terrible imbalances suffered in the world.

We have made clear proposals, defending in all areas and at all times, what we consider to be the vital principles of this Bolivarian Republic: equality in international relations, sovereignty, independence and freedom of all the peoples on earth. We have opened several new paths for real co-operation with all countries, especially relations with the poorest peoples of the planet.

In this struggle for world dignity, which Venezuela has assumed, OPEC is perhaps the clearest example of the rightness of our policy. We are returning to the brilliant ideas of Juan Pablo Pérez Alfonso and the Saudi Abdula Tariki, who founded OPEC on a simple premise: an Organization destined to defend the fair value of the basic product of its members and to guarantee opportune supplies of crude for world consumers.

We understood that after 40 years - recall that OPEC was founded in Baghdad in September 1960 - and 25 years after its first and only Summit Conference, the Organization needed to adapt to the new and crucial issues on the international agenda: globalization, foreign debt, deterioration of the environment, critical levels of poverty, etc., which, for its own survival and in the interests of member countries, should be considered as a whole and at the highest level.

At the present time, we are experiencing crude prices that have fallen to their lowest possible levels, which do not correspond with the real value of one of the most important commodities in the modem world, and are causing serious economic and social crises in all producer countries. We have therefore proposed a revitalization of OPEC. We realized that an active, respected OPEC, with influence in the world, would guarantee the survival of Venezuela and the well being of the 500 million people of the 11 countries of the Organization.

A first step was to give an example. We imposed discipline on our production, respecting the voluntarily accepted OPEC quota. This action had two interesting repercussions: Venezuela recovered its position as a serious and responsible country in the Organization.

Most of the member countries reacted positively by maintaining their production at the agreed levels. A second step was to promote a policy of closer relations and co-operation with the non-OPEC oil exporting countries, which are important suppliers of crude. The objectives of this policy were to achieve a minimum agreement on the production rate, to reduce world crude supplies and influence the level of international prices. In this crusade we were supported by our friends in Saudi Arabia and Mexico. Together we designed a strategy to convince our partners in OPEC and the non-OPEC countries to cut production. The immediate result was an agreement on an effective decrease in oil production, which all the countries voluntarily accepted.

This cut, aimed at improving market conditions, provoked a surge in oil prices.

In view of the abysmally low oil prices at the start of our administration (an average of US$8 a barrel) it was essential to beware of the false illusion that OPEC dominates the oil world. We understood that with prices at extremely unjust levels from the economic point of view an appropriate mechanism was needed to influence the trend and, perhaps most important, to create an objective reference for consumers and producers alike; which is basic for our economic and social planning.

This idea materialized in the application of a system of price bands, whereby the OPEC countries increase or decrease their production in a range of $22 to $28 a barrel. Despite this practice, international crude prices, as a result of market forces and speculative movements, have overtaken the US$30 barrier. OPEC has attempted, by means of timely increases in production, to maintain a fair price in the pre-established range, but has not achieved a large reduction so far. For Venezuela, the level of prices is a question of survival and justice, although we are fully aware of the impact of the many factors at work in the market, such as new sources of oil, alternative energy, trends in the economies of the consuming countries and the environment.

We accompanied these important actions with concrete diplomatic steps to invite the OPEC Heads of State to a Second Summit Conference in Caracas. Despite immense obstacles, we received - I believe in large part because of the seriousness and responsibility we have applied to our domestic oil policy - a favourable response from our OPEC partners: we all agreed on the need to debate the major issues of the Organization at the highest level.

The Second OPEC Conference of Heads of State should have been held in March 2000, but the tragedy of December 1999 forced us to postpone the event until September 2000, the month of the 40th anniversary of the Organization. Fortunately the delay opened up interesting opportunities for OPEC and our bilateral relations with each of the members. As a follow-up to the new oil policy, I wish to mention the visit that I had the pleasure to make to all the member countries of OPEC from August 7th to 15th this year. It was an unforgettable experience from every point of view - political and personal. We crossed vast oceans and deserts as sunsets were quickly followed by sunrises; we admired ancient civilizations; we heard the laughter and clamour of all the peoples of the OPEC family and, offering our message of friendship and good will, we harvested the fruits of solidarity and understanding.

The Second OPEC Summit of Heads of State is the culmination of all these activities, which have involved some five thousand people. The Summit, the second to be held by OPEC in its 40 year history, is a triumph for the unity and solidarity of all its peoples. Its success depends on each member, and Venezuela, as a founding member, is anxious to contribute to this laudable objective with all its capacity, resources and efforts.

The success of this Summit, in the part that corresponds to our country, is an obligation for all Venezuelans. Every one of us, within our capacities, must give of our best to make our distinguished guests feel at home. But, at the same time, we should enjoy this magnificent cultural gift which our brothers in OPEC have brought us: their music and dance, their art, and the mysteries of their theatre.

With my best wishes for the success of the Summit, which will be a success for all our peoples, I warmly welcome the delegates to the Country of Simón Bolívar.

The Second Summit of Sovereigns, Heads of State and Government of the Member Countries of OPEC.

Extracts from what the Heads of States said...


H.E. Abdelaziz Bouteflika President of the People’s Democratic Republic of Algeria:

The Algiers Summit was necessary to deal with the common front presented by the developed countries that sought to ensure that all consumer countries would join forces with them. It was an upheaval, a change in the international scenario which some have described as an “oil shock.”

the world in which OPEC was born and took its first steps has changed radically. We are at a junction between two millenniums and the effects of the developments of the last few decades have profoundly changed international relations in so many aspects and dimensions. We are affected by the process of globalisation but the results mainly affect the weakest countries which are most dependent on their natural resources.

Apart from the fact that we are forced to make great sacrifices in the social sphere, this process makes access of our products to developed markets very difficult. Moreover, globalisation is taking place at a time when some fiscal measures which are excessive impose a great burden on the price of fuel in developed countries and new sales and environmental taxes are being levied. These are aimed at reducing our sales and hence our income and, paradoxically, this makes our countries look guilty to the other consuming countries which are the ones to blame for this.

It would seem that the industrial performance and the profits and productivity and the progress made over all these decades by the developed countries could be achieved overnight by our countries. This progress is due to modern scientific and technological progress and to a large extent they have benefited from the low prices of our own raw materials We cannot overcome the very serious obstacles to underdevelopment without being able to maintain our purchasing power in international markets and without external capital and technological progress.

We are very well aware that industrialised countries function at a different rhythm to us and have means and possibilities that we do not have.

The rules that govern economic financial relations impose that rhythm on us, but this rhythm is also imposed on the larger industrialised countries where current economic considerations are given more importance than matters of substance.

It would seem that the large industrial powers only seek to conserve their hegemonic positions and secure the globalisation of the economy for their own profit, even if to do so they take liberties in which they impose a free exchange system on the rest of the planet. Because of the impact on oil supply and demand, the energy policies implemented by the Western countries have seriously affected efforts by OPEC to stabilise prices.

While the Organisation strives to control our petroleum resources, these policies, over several years, have brought about a certain number of constraints and challenges which we have to manage. These situations and these strategies are making OPEC a residual producer

and, therefore non-essential. OPEC’s production will therefore serve to offset shortages when world supply is unable to meet demand.

With respect to world petroleum production, OPEC will see its earnings fall and will not benefit from the reciprocity which will compensate the shortfalls. These fluctuations will greatly contribute to the profit of the speculators on the oil market and to the benefit of consumers and producers alike. With respect to the regulation of demand, the new energy policies which

are being advised by the International Energy Agency, among others, tend to favour the return of an overabundant supply on the market. OPEC is gradually being deprived of its traditional landmarks as far as quotations and reference prices are concerned. Arabian light crude has not grown as a reference in favour of North Sea Brent and Texas light crude, for example.

We should bear in mind the limited duration of these proven resources.

The essential question for these countries is to find out whether, in the long run, we will be able to discover new fossil fuels and what will be the production cost of these new fuels.

Using those reserves calls for important capital input, while only 30% of the flow of petroleum investment world-wide is directed towards developing countries.

The level of oil costs is and will continue to be one of the key variables in the world energy environment with all its geopolitical repercussions and changes.

We have and continue to play a fundamental role to play in ensuring oil stability in the market. We have to ensure a stable supply at fair prices.

With respect to communication, we have to make a great effort to improve the image of organisation in international opinions, public opinions. It is also important for us to inform the consumers that the penalisation affecting them through the taxes imposed by the governments on the price of the fuel, is not the responsibility of OPEC.

In Algeria, we are convinced of the need for major economic reforms to increase the capacity of production at competitive costs to attract necessary private investment and private capital which are so vital for our organisation and for our development.

Thanks to the massive production and supply of oil over the 20th century, the contribution of our countries to the prosperity of the world economy is patently clear to all.

This dialogue should also contribute to preserving and strengthening the role of oil and gas and future developments of world energy demand.

Nothing, indeed nothing opposes or stands in the way of a dialogue between the G8 and OPEC. The objective of this is to take into account all of the reflections, all of the thoughts that I have just been sharing with you.

The will of OPEC to satisfy in good time and in sufficient quantities the oil demands of consuming countries, while at the same time ensuring price stability and guaranteeing earnings, equitable earnings, should be based on stable, competitive, remunerative prices with respect to other competing energy sources; secondly, on co-ordinating trading policies in consonance with production policies in order to ensure fair earnings for OPEC countries in world oil supplies.

H.E. Hugo Chávez Frías

President of the Bolivarian Republic of Venezuela:

A people that open its hands to receive and deliver its heart to you to tell you in an infinite chorus that goes beyond the winds, welcome sons of Ala, followers of Mahoma, “Ahlamwa Sahlam”, “Marhaba, “Al Salam Aleykum”.

The first oil shipments left Venezuela by the San Lorenzo terminal on Lake Maracaibo in 1917 and by 1928 Venezuela had become the first world net oil exporter. Well, my brothers, the fiscal participation of the country in those 12 years, reached barely 8 million dollars, having produced a total of 266 million barrels and the posted price at that time was 245 million dollars .

I invite you to consider the Statutes of OPEC in its Articles I and II.

Article I reads: “The Organisation of Petroleum Exporting Countries OPEC from here will be nominated the Organisation created as an Inter-government Organisation of a permanent capacity consistent with the resolutions of the Conference of Representatives of the Governments of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, which met in Baghdad from the 10th to the 14th September of 1960 shall carry out its functions according to the provisions established as follows”, and these provisions are set out in Article II which reads: (it has three parts):

The 1st, sub-paragraph (a) “The main objective of the Organisation shall be the co-ordination and the unification of the petroleum policies of member countries and the determination of the best means to safe guard the interest of both individuals and collective”.

The 2nd Point, sub-paragraph (b) reads “The Organisation should arbitrate means to assure the stability of the prices in international oil markets with the objective of eliminating fluctuations which are harmful and unnecessary.

This is what we are doing today, articulating all the possible means to seek the stability of prices because it is true that we are not behind an unlimited rise of our oil prices.

With stability at a fair price for our oil we are re-stating the unity of principles of the Organisation.

Lastly, the 3rd point reads, and it is also very important that we emphasise it “At all times due attention should be paid to the interest of the producing nations and to the needs to ensure a continuous income for producing countries, of an oil supply which is efficient, regular and economical.” Allow me to underline these three words, oil supply which is efficient, regular and economical for the consumer nations and a profitability which is fair for the capitals of those who invest in the oil industry. There we find the three components that today we have to review in depth, producers, the intermediaries and the consumers. As clear as crystal we see indicated in these statutes our objectives and we are complying with them.

This is exactly what we are doing here, specially during the last 20 months, a stage that we could call the resurrection of OPEC.

The XXI Century will be very different from the one we left behind, a century of famine and misery and death. The XXI Century should be the century of life, of unity of peace, of fraternity. Of the union of civilisations. A meeting of civilisations, millenary civilisations.

Caracas today is the centre of attention of the world. The eyes of the world are upon us.

We hope that we will be up to the expectations of all the brothers in the world. What does an efficient supply really mean? Blood, a blood transfusion, a blood donation, for instance will be efficient if it benefits those involved, but it won’t be efficient, or it will no longer be efficient, if it might imperil the life of the donor. It would take him to his grave in spite of the fact that the recipient might leave the hospital in a very healthy condition. That’s not efficient. Efficiency has to be seen in its overall picture.

Or the subsidence that we see on the coast of Lake Maracaibo, the waters of Lake Maracaibo are one of the by-products of oil. the result of the oil exploitation of almost one century and the Western Coast which is sinking before our eyes from so much oil we have produced where so many thousands of people live, complete towns have been sinking and sinking and there we are carrying out scientific studies. We will have to invest millions of dollars just to rescue that region.

Therefore we think that supply has not been, in the case of Venezuela, efficient. We cannot continue polluting the water of our lakes, of our rivers, of our seas. We cannot continue destroying nature in a savage manner and, what do we leave to our grandchildren?

OPEC has been supplying over 40 years, regularly supplying, in a timely way its oil to the world for its development or its sustainment to its promotion. No one can say we have denied anyone our oil, We have never denied our oil to anyone, nor will we do so.

They have to sell us cheap oil. No, I say, economical does not mean cheap. Giving it away, no.

We can reform heavy oil, super heavy oil, extra heavy oil into lighter oil. In the case of Venezuela the greatest reserves are heavy crude and extra heavy crude. To exploit these heavy crudes we would have to invest great amounts of money.

Use and the exchange value

As to the fair price for our oil, what is the price of energy produced compared to a barrel of oil? What can the countries that buy our barrel do with one barrel? Turn this around and say: What could they do without oil? How could they have reached the levels of development they enjoy today? What would they have done? What would they do today if we hadn’t sold them our oil and if we didn’t continue to sell them our oil? Use value. The development, the take-offs of the countries of the industrialised north is, of course, due to many factors, but in good measure it is due to the regular, efficient supply, continuous and permanent supply of oil that we have always complied with for the last 100 years.

Now the exchange value. What can we exchange for one barrel of oil? (let’s assign the average price for this year in Venezuela, $26.2 a barrel – this is the average for this year in Venezuelan oil. A barrel of Coca Cola is worth $74.7: 303% compared to a barrel of oil. A barrel of spring water, $94.37: 360%.

Let’s tell the world the whole truth.

Justice, only justice. In other times of our history, we indicated as guilty those who are guilty for the imbalance of the world. The guilty are elsewhere. We are victims of the imbalances of the world economy. We are not at fault. Those at fault are to be found elsewhere. Allow me, from here, to send in that same spirit of truth and tauhid, our greetings to the great consumer countries, members of G-8, and the European Union. One time, a resident of a powerful country in the world called me up, I was amazed, and he tells me: Mr. President, I’m concerned over the price of the barrel of oil. And it wasn’t even at $25 at that time, and they were already concerned. I share your concerns, Mr. President. And it’s a good opportunity that we should have this talk.

Why don’t we talk about the external debt, Why don’t we speak about the terms of trade which are so unequal and savage, and the imposition of the economic systems which control the world, which Foster recently called in his new book “the economic dictatorship of the world”? A free agenda. From Caracas we state this. We’re willing to discuss this with the world any time, anywhere, but on an equal footing. Let’s talk about this. Let’s seek solutions to the common problems we share. Let’s seek new paths. Our greetings, with all respect, faith, optimism and brotherhood, to the brothers of the world, and in particular to the presidents and leaders of the powerful countries of the world. We wish to co-operate with you. We wish to talk with you. We wish to seek solutions together. OPEC, strengthened and unified, shall increase its efficiency, its supply, and shall its regularity and shall seek, as we have always sought, fair prices, balanced prices for our oil, a vital resource for the world. In this we are responsible; we assume our responsibility. In the recent Summit of the Millennium in the United Nations. There, we set a goal to fight against poverty, to reduce it by half by the year 2015. A great question: How will we do this? And that’s part of the dialogue we have to undertake: frank, deep, open, in the whole world. How will we change the history beyond words? Today, we will have far more to say. The crisis of today’s world is not limited to the economic sphere, as was the case 25 years ago. Today, it’s a global crisis. It has spread like cancer to the areas of ethics, of politics and society. The basic question, the great question in the whole world is how will we leave this crisis behind us, this universal labyrinth? Allow me to say, brothers on this path, that only the union of our efforts, that only the coming together of our peoples, of our cultures, of our economies, of our sovereign political wills can allow us to solve this very difficult enigma and to help the world, with humility, to seek solutions.


H.E. Abdurrahman Wahid

President Republic of Indonesia:

We have to reach the goal of agreeing on the principle that a just price should be found for our oil. How much it depends on the OPEC Ministerial Meetings? It is not on the Heads of State or delegations to decide. But the principle itself is very important because we know now that many of the attacks on OPEC are unguaranteed and unbased.

There is no need for so high taxes on oil prices. So the so-called high price of oil, actually is produced by the more developed countries, not by the producing countries.

The interest of both parties, the sellers and buyers, depends on petroleum and there should be a balance and an effort so that we can offer something from which all the countries of the world can benefit; a price that offers the possibility and the capability to oil-producing countries to overcome poverty, benefit from those resources and finally gain from energy. The price should be an expression of Mankind’s and the world’s need for this balance.

H.E.Seyyed Mohammad Khatami

President of the Islamic Republic of Iran:

This Summit is being held at a juncture when the world Heads of State at the United Nations Millennium Summit have already expressed their views on the trend of new developments across the world, and their opinions on the patterns it ought to follow. All nations have the right to equitable benefit from world progress, while sharing in the responsibility for the promotion of democracy, justice and the alleviation of economic inequality of national, regional and international levels.

Globalisation, has left consequential impacts on the political, economic, and cultural patterns worldwide. Failure to provide equitable opportunities for progress would result in world communities being assimilated by the culture, the economy, and politics of the unipolar system.

All nations have the right to enjoy progress and development.

Consequently, all natural resources must be utilised to create equal opportunities and strengthen democratic institutions for all nations.

Certainly, it is not fair for a part of the world to pay the progress at the expense of the less developed of developing regions. There is no doubt that hegemonic tendencies and power politics pose serious threats to mankind, so we should contrive a new balanced pattern for sharing capabilities and advanced technological and communication know-how and seek solutions on the basis of common interests aimed at sustainable worldwide development.

Is the time not right to adopt a moral and non-materialistic attitude towards a more meaningful world and to show appreciation of our intellectual attainments through ensuring the dignity of man and preserving nature from either abuse or other exploitation? Should we not act upon our social responsibility and acknowledge cultural diversity in order to nurture cultural dialogue and to revive civil society at the global level?

OPEC assumes a new significance and a fresh role in the elimination of discriminations and injustices that exist in the framework and context of international laws, practices, norms, structures, and institutions.

Twenty-five years have elapsed since the First OPEC Summit in Algeria. In the history of the oil market, OPEC has lost a great impact on the economic and political life of the member countries and the world as a whole. Oil is a national asset, belonging to all future generations. This precious resource should form the basis of the wellbeing and progress of our posterity by being transformed into reproducible capital for their benefit.

In view of the vital role of oil in the world economy, and its share in the gross domestic product of producing countries, as well as the world trade, stability in the oil market is bound to contribute not only to the development of the OPEC member countries, but also to the growth of the world economy. Thus, market stability and security of supply must be achieved through co-operation of all parties involved, without the imposition of the cost on the producing countries alone. OPEC must continue to play its role based on role priorities. These priorities include the formulation of production and investment strategies for member countries, reaching an agreement over a reasonable price range for crude oil and the proportionate expansion and development of the oil industry and resources.

The blueprint for capacity expansion must be based on the security of supply without weakening the competitive position of oil vs. other sources of energy.

Throughout its history, OPEC has always acted upon its responsibility in ensuring timely and adequate supply of oil. In this context, any unilateral economic restriction with political motivation will impede development of oil resources, harm free trade, threaten the unimpeded

supply of oil and ultimately endanger interests of producers and consumers.

Today, we must respond to the need for continued co-ordination through regular and high-level political and economic contacts among all oil producers and exporters.

The present political will of the oil producers and consumers, as well as the immense developments in the world politics and economics will foster the necessary conditions for continued and constructive dialogue between the producers and consumers. Acceptable prices for oil and its products and the prevention of discriminatory and protectionist policies in levying taxes on different levels can be addressed. Iran is seriously engaged in an earnest effort to raise production in order to maintain oil prices at a level acceptable to both producers and consumers. Yet we cannot hide our concern over heavy taxes paid by the final consumers. Therefore, we expect measure to be taken to correct the imbalance in the elements of the final price, I recommend that members of OPEC adopt a common stance as to preserving a healthy environment, enhancing its standards, and impeding the adoption of national and international laws that are discriminating against oil and gas.

The Kyoto Protocol, Since all OPEC member states have contributed towards economic growth, they have the right to expect preferential treatment -- within the framework of the said Convention --- in trade and access to the sources of finance and new technology to make up for some of the losses resulting from the implementation of the Kyoto Protocol.

Excellencies, although we have come together to discuss oil and energy, we all belong to countries and nations endowed with higher advantages even more precious than oil. We have strong and deeply rooted histories on pillars of faith, civilisation, culture and creativity. Indeed our oil resources should not be overemphasised in comparison with our resolve to establish our powerful presence and active role in the world of tomorrow.

We should try to understand this position and reshape the mode of our co-operation accordingly. Let us transform our age into the era of the dialogue of cultures and civilisations; and relying on our cultural heritage as well as our historical and political commonalities and backgrounds, let us now open up new prospects for comprehensive, but a just and fair regional and international development.

H.E.Olusegun Obasanjo

President of the Federal Republic of Nigeria:

The horizon is full of many challenges to OPEC:

1. The need to act together to attract investment, so that we can meet the world’s petroleum supply requirements, and

2. The grave challenges posed directly to petroleum producers by attempting to deal with the issue of potential global climate change.

Our experience these past two months tells us that OPEC members must attract huge, new investments from outside our borders to expand our petroleum production capacity. we all know that we may be uncomfortably close to not having adequate production capability.

OPEC is pledged to fair returns on capital to investors in our industry.

However, global investment and capital flows can only flourish in an economic environment that encourages free and fair trade. The unfair taxation of petroleum products, particularly in the major consuming countries in unhealthy. In the European Union for example, an average of 68 percent of the price of a litre of petrol goes to government coffers to clear budget deficits!

Unfortunately, the dominant attitude in the international negotiations on climate change is bent on driving a stake into the heart of oil production, especially in member countries. Most of these policies are explicitly intended to drastically reduce the consumption of fossil fuels –the Kyoto Protocol. Oil exporting countries would stand to lose more than 20 billion US dollars of revenue by the year 2010- more stringent international agreements, which are highly likely, that revenue loss will jump to more than 60 billion US dollars in 2030 – in constant US dollars.

The scenario would worsen if developing countries were to succumb to pressure by the North to undertake their own commitments to reduce greenhouse gas emissions, and this would imply a catastrophic reduction in the consumption of petroleum products by those countries.

This November, the governments of the world gather in The Hague to consider decisions to implement the Kyoto Protocol.

May I urge your Excellencies to encourage your representatives in these negotiations to contribute actively to a strong, united OPEC front. To reject approaches that defy our individual and common well-being as major petroleum exporters. We have a duty to defend our future against those who choose not to respect it.

We OPEC nations have an aggregate gross domestic product of about three-quarters of a trillion US dollars, which is exceeded in size by the individual economies of only eight countries in the world. We certainly understand the crucial role played in our economies by our major involvement in international trade. Yet we trade so very little amongst ourselves. It is as though we, in OPEC, are colleagues and strangers at the same time.

Groups of countries all over the world have formed trading blocs. Do they have more in common than we do? I doubt it. The issue of dialogue with the industrialised countries. We must be able to present our case, not in a confrontational manner, but in formal dialogue.

The issue of debt burden on our national economies. The situation calls for urgent and concrete actions by the creditor nations, if the sharp division between the North and the south is to bridged.

His Highness Hamad Ben Khalifa Ben Hamed Al-Thani Emir of the State of Qatar:

The State of Qatar was the first country to apply for membership and became just three months after the establishment of the Organisation, the sixth member together with the five founders.

The Organisation did not seek confrontation with consuming countries or any others. Quite the contrary, it did its utmost, over the last two decades, to establish dialogue with consumers and other producers. OPEC countries have for a long time attempted to put an end to the high taxes imposed by some industrial states on oil products.

Unfortunately, those states continued to blame producing states even after OPEC recently raised its production by more than three million barrels a day this year and after several producing countries have reached their maximum capacity. In many countries, the tax on oil has become an important means for financing the various projects instead of looking for other sources of income. The citizens in consumer countries may believe that the reason for the price increase of oil products is the policies of the oil producing countries, whereas in fact, they are high, first and foremost, because of the heavy taxes imposed on these products by the consuming states.

It is well known that low oil prices were not encouraging investment in the field of additional production capacity to match increased consumption in a world that witnesses flourishing economies and populations aspiring to improve their living standards. It is, therefore, only natural that producing countries co-operate in determining production levels in order to improve prices.

The State of Qatar proposes that OPEC adopt a suitable mechanism for the stability of oil prices at levels that maintain its purchasing value; specially as the consuming countries, and the major ones, in particularly, are now proposing prices that they consider acceptable and fair and which are not out of the range that producer nations are seeking.

Once prices encourage the necessary investment in additional production capacity that can secure the required oil supplies and continuity of world economic growth at acceptable rates, this will, also, contribute to the oil market stability.

His Royal Highness Abdullah Bin Abdulaziz Al Saud Crown Prince of the Kingdom of Saudi Arabia:

The relations between our Organisation and other oil exporting countries have to be strengthened for the sake of achieving our common goals. We expect our Organisation to become an umbrella for all the oil producing countries, and stand ready to welcome new members who will share with us the goals and aspirations. Also, our relations with the consuming countries must develop within a framework of dialogue, understanding and mutual interests.

We recognise that confronting poverty and putting an end to it, constitutes one of the most important goals of our era. This end, however, requires a world trade system, free of any arbitrary and unjust taxes imposed on oil and its products, as compared to other energy sources.

The past 25 years have taught us several lessons which crystallised during the last two years.

1st. The need to recognise the importance of the nations and the market sensitivities and how they are affected by our decisions, so that we can have an optimal level of oil income, as well as endeavour to increase our share in the market.

2nd. The balance and stability of the oil market is a joint and equal responsibility of all member states of our organisation, in addition to the role expected of other producers, and consumers in this regard.

Hence, we attach significance to the concept of shared responsibility between all OPEC members, on the basis of fairness and equity, as well as accurate and solid facts.

3rd. There is a need to address world public opinion to correct the unjust image that blames our organisation.

As much as we were concerned about the plummeting oil prices two years ago causing considerable damage to our economies and the world oil industry, we are equally concerned now at the increasing level of prices that could have a negative impact on the role of oil world-wide and the prospects of international economic growth. We have tried to make available and save needed supplies to maintain the balance in the market and moderate oil prices. The process, however, requires from the governments of the consumer states to bear their share in alleviating the burden on the ultimate consumer by reducing the excessively high taxes on petroleum. We hope for these governments to do away with the policies and slogans which erroneously present OPEC countries as an unreliable and insecure source to meet international energy requirements.

It is wholly unjustifiable to cast doubts on the ability of our Organisation to provide available needed oil supplies. The Kingdom of Saudi Arabia is ready, whenever needed, to produce the quantity required for the stability of the oil market.

His Highness Hamad Bin Mohammad Al Sharqui Member of the Supreme Council of the Federation of United Arab Emirates Governing Authority of the Emirate of Fujairah:

The governments of industrial countries, under various pretexts, are levying large sums of funds from increasing taxation on petroleum products, much more than those generated from crude oil sales in producing nations. Continuation of this would certainly negatively impact the demand for oil in future.

We call for stable oil markets around fair prices, in order to secure sufficient funds to help continue the process of development in our countries, Among future challenges our Organization could face are environmental issues, the uncertainty regarding oil demand growth, the amount of growth in non-OPEC production and technological development.

Industry doors open to foreign participation and many oil companies took an advantage of this opening-up. This reflects the consistent policy of the United Arab Emirates for a free and open market.

Address by President Saddam Hussein, President of the Republic of Iraq, delivered on his behalf by Mr. Taha Yasin Ramadhan, Vice- president of the Republic of Iraq:

We hope that this Summit will be successful in shaping the future policies and positions of oil-exporting countries towards preserving the value of oil as a depletable strategic and economic commodity that plays an essential role in sustaining economic growth in all the countries of the world as well as maintaining the stability of the world oil and energy market through oil prices that are remunerative for producers and fair for consumers.

The policies of certain industrial countries, particularly the United States of America, that are embodied in the programme of the International Energy Agency, are aimed at weakening OPEC. The collapse of oil prices in the mid-80s and in 1998 is clear evidence of the grave impact of these policies on the interests of oil-exporting countries.

Lifting the embargo, imposed by the United States of America against the people of Iraq, will serve market stability and sound international relations.

Iraq calls for a start to a serious dialogue between producers and consumers. It also calls for the developing oil-exporting countries to be compensated for the damage inflicted upon their economies as a result of the application of environmental protection decisions.

OPEC is invited to develop its ties with non-OPEC oil-exporting countries by all possible effective means. Iraq commends the spirit of co-operation recently demonstrated by many of these countries with OPEC, especially the Russian Federation, Oman, Mexico and Angola. Hence, we call on the non-OPEC oil-exporting countries to join OPEC in such a way that it will bring about closer co-operation for the sake of common interests.

OPEC Member Countries. We call on this Summit to adopt policies, resolutions, and decisions that will promote relations between these countries by increasing commercial and capital flows among them and further relations between their national oil companies and the exchange of experiences and technical know-how for their mutual benefit.

This Conference should send the crystal clear message to the world that it is necessary to achieve justice and equity as well as to ensure welfare for all the peoples of the globe free of any kind of exploitation, hegemony and blackmail.

H.E. Mustafa Al-Kharroubi

Member of the Revolutionary Council of the Socialist People’s Libyan Arab Yamahiria:

Since the advent of Revolution in 1969, my country has played an important role in strengthening this Organization. It led the price battle and worked towards its adjustment, and was able to force the companies to admit its right for doing so. Also, the signing of the 1st Tripoli

Agreement paved the way for the countries of the Organization to issue the historic Caracas Declaration (Dec. 1970) which lay out the principles for the need to raise oil prices, and increase the share in profits for the producing countries. This was followed by the signing of the Teheran Agreement and the 2nd Tripoli Agreement, and then the 1st and 2nd Geneva Agreements that so established the right of the exporters to receive compensation for the losses resulting from a decline in the exchange rate of the US dollar.

The true culprit of the high prices of oil products are the tax policies that the governments in the consumer countries adopt under different denominations and forms, with the excuse of protecting the environment. If it is allowable for the consumer countries to demand from the producing countries to reduce the prices of their oil, then it is only fair that these countries reduce the prices of the products that the developing countries need.

We meet here today, more optimistic and more determined to achieve our goals, to strengthen our mutual efforts, and to emphasise our control over our oil wealth by:

1. Maintaining the credibility of the Organization and the strengthening of co-operation among its member states.

2. Establishing a dialogue with the consumer countries based on equality and mutual respect, aimed at achieving a just economic system.

3. Seeking to hold a summit conference between the producing and consumer countries to lay down a strategy which would ensure avoiding any crisis or difficulties in the oil market.

4. Recognizing oil-producing areas as “sensitive areas” and deal with them accordingly, so as to distance them from tensions and conflicts, which could affect the flow of this vital commodity to the world market.

H.E Saud Nasser Al-Sabah

Minister of Oil of the State of Kuwait:

OPEC has played and continues to play a crucially important role in supplying the energy the world needed then and needs now, contributing to global social and economic progress. In so doing, the Organisation faced extremely complex circumstances and great challenges and difficult crises.

However, through the unity and solidarity of its member countries, OPEC has managed to survive and actually overcome all these challenges and face up to its great responsibilities.

The member countries of OPEC, as a whole, are home to more than three quarters of the world’s total energy reserves, as well as the most important sources of energy, and this will remain so for many years, even more so now that the OPEC member countries recognise the strategic value and importance of oil and petroleum energy, as well as the qualities that petroleum contains and that cannot be found in other sources. We can achieve the best use of these petroleum sources with technology and through the transfer of technology, while making very serious efforts to improve the international trade in oil.

Many countries discriminate against this source of energy. Kuwait obtains over 90% of its income as a State from oil and therefore oil market fluctuations and volatility will inflict serious damage on our economy. Developing our oil reserves and expanding our production capacities to meet oil demand world-wide, calls for huge investments, which is only possible if the necessary resources and income are obtained. Such investments must be based on clear-cut long-term projects. We must give co-operation and dialogue all the attention they require in order to be able to analyse the situation of the world oil market better and obtain the best means of ensuring fruitful co-operation.

H.E. José Betelho de Vasconcelos Minister of Oil of the Republic of Angola:

Our profound thanks for inviting us to take part as observers at this important meeting, together with the Ministers of Foreign Affairs, Finance and Oil of the OPEC member countries, at such a delicate time for oil producers and consumers alike.

This Summit been designed to discuss long-term issues, such as the establishment of a fair dialogue between producers and consumers, efforts to make the oil market stable as regards price levels and the endeavour to strike the right balance between oil economies and oil prices.

Is a producing country and a nation with economic problems and policy restrictions, but we will always be prepared to contribute to the efforts of your esteemed Organisation, provided these are necessary to establish justice in the oil market.

H.E. Alexander Gavrin

Minister of Energy of the Russian Federation:

My sincere gratitude for the invitation extended to the Russian delegation to attend the OPEC Summit in Caracas. Russia watches closely the deliberations of this Forum covering issues important not only for petroleum producing countries, but for the world economy as well. The current OPEC Summit – It’s decisions will, to a major extent, determine the strategy of development of oil producing and oil dependent sectors of the world economy, as well as prospects of the global petroleum market in the first decade of the 21st Century.

Active cooperation with leading petroleum-exporting countries – both OPEC members and independent producers – is one of the priority tasks of the Russian energy diplomacy.

We consider that maintaining a stable and predictable oil market is one of the main aims of all our countries.

Russia fully respects OPEC’s decisions, especially reached by this Summit, and will be sure to take them into consideration while working out its own oil policy.

President Hugo Chávez Frías

President of the Republic Bolivarian of Venezuela:

We have been listening to the messages of the Heads of State from the G-8, from the European Union. There are different positions, we have to respect them. We are obliged to hear them all.

We should evaluate the possibility that presents itself for an informal dialog and we can respond that we are willing to have a dialogue at Head’s of State level. I can go wherever and with whom at any time.

His Royal Highness Prince Abdullah, and President Buteflika also mentioned the launching of a communication campaign. We should speak to the world, and that requires a plan, we normally do it but each one in his own country, but why don’t we have a plan. We can ask our General Secretariat to prepare this with experts. It will cost money but I think we should do it to neutralise any intention to, once again, make us the villains, the ones to blame, the ones that are threatening the world.

The "Caracas Declaration"

Solemn Declaration of the Second Summit of Heads of State and Government of OPEC Member Countries We, the Heads of State and Government of Member Countries of the Organization of the Petroleum Exporting Countries (OPEC), having decided to hold our second Summit in furtherance of our co-operation and to give continuity to the spirit of solidarity and unity of our first Summit, which was held in Algiers in 1975, and cognisant of the sovereignty of Member Countries over their natural resources, and their obligation to advance the development of their peoples, have accepted the invitation extended by HE the President of the Bolivarian Republic of Venezuela, Hugo Chávez Frías, to meet in Caracas from 27th to 28th September, 2000.

Noting that oil has become the main source of energy during the last century, thus contributing significantly to world economic, social, technological and scientific development; Recognising The strategic importance of oil as energy source for mankind.

The contribution of Member Countries to world economic prosperity through the provision of oil; The vital role of oil resources in our national economies.

And Taking into consideration the rapid pace of change in economic, political, technological, and environmental developments, and the challenges and opportunities created by globalisation and liberalisation;


1) To reaffirm the principles and objectives of our Organization as stated in its Statute 40 years ago. In doing so, to aim at the preservation and the enhancement of the role oil would play in meeting future world energy demand.

2) To protect the interests of OPEC Member Countries, both individually and collectively, through suitable strategies and policies designed to optimise the overall economic benefits that can be derived from the utilisation of their vast natural resources.

3) To express our firm commitment, as key participants in the global oil market, to continue providing adequate, timely and secure supplies of oil to consumers at fair and stable prices; and to emphasise the strong link between the security of supply and the security and transparency of world oil demand.

4) To develop oil-pricing policies that are remunerative, stable and competitive with other energy sources, in conjunction with a production policy that ensures a fair share for OPEC in the world oil supply. Such policies are to contribute to market stability and sustainable growth of the world economy.

5) To continuously seek new ways and means for timely and effective co-ordination among OPEC Member Countries, so as to achieve their medium and long-term objectives.

6) To enhance existing, and build new, capabilities and skills within OPEC in order to ensure that the Organization is able to adapt to change, including globalisation and technological advances, and to maintain an effective participation in international fora.

7) To promote mutually beneficial co-operation among OPEC National Oil Companies, and between them and the international petroleum industry.

8) To strengthen co-operation on a regular basis between OPEC and other oil exporting countries to achieve market stability.

9) To actively seek new and effective channels of dialogue between oil producers and consumers, for the purpose of market stability, transparency and sustainable growth of the world economy. In this regard, it is anticipated that the 7th International Energy Forum, to be held in Riyadh, Saudi Arabia, during the period from 17th to 1st November, 2000, will be an excellent opportunity for such dialogue, to which consuming countries are invited to participate at the highest level.

10) To assert OPEC's association with the universal concern for the well-being of the global environment, and its readiness to continue to participate effectively in the global environmental debate and negotiations, including the UN Framework Convention on Climate Change and the Kyoto Protocol, to ensure a balanced and comprehensive outcome, taking into account the principle of common but differentiated responsibility, and to urge countries listed in Annex I of the UNFCCC to implement policies and measures to minimise the adverse social and economic impacts of their response measures on the countries whose economies are highly dependent on the production and export of fossil fuels.

11) To call for the use of both oil and gas in circumstances where they can be substituted for other fuels which are recognised as being damaging to the global environment.

12) To emphasise that economic and social development and the eradication of poverty should be the overriding global priority. To this end, OPEC will continue its historic record of taking the issues of the Developing Countries into full, consideration, inter ail, through their individual aid programmes as well as through the OPEC Fund for International Development and the International Fund for Agricultural Development; and urges the industrialised countries to recognise that the biggest environmental tragedy facing the globe is human poverty.

13) To note, with concern, that the debt levels of many Developing Countries have become unsustainable. We, therefore, call for substantive effort for debt reduction initiatives by the international donor community, including the urgent fulfilment of the Heavily Indebted Poor Countries (HIPC) initiative.

14) To call on the consuming countries to adopt fair and equitable treatment of oil in world energy markets by ensuring that their environmental, fiscal, energy and trade policies do not discriminate against oil, thereby helping to achieve global sustainable development.

15) To express the concern that taxation on petroleum products forms the largest component of the final price to the consumers in the major consuming countries, and call upon them to reconsider their policies with the aim of alleviating this tax burden for the benefit of the consumers, just and equitable terms of trade between developing and developed countries, and for the sustainable growth of the world economy.

16) To boost efforts and programmes to diversify our economies, placing greater emphasis on technological innovation, to which end external and internal barriers to diversification need to be anticipated, identified and removed. Industrialised countries and relevant international organizations are called upon to collaborate towards the achievement of this goal, cognisant of the mutual benefits which will be realised.

17) To acknowledge the vital role of in-depth scientific and technical research, to recommend stablishing links among the research centres in the Member Countries to aid the OPEC decision-making process, and to consider ways and means in which the research activities of our Organization could be strengthened, including exploring the possibility of establishing a research institute or university.

18) To instruct our Finance Ministers to study ways and means of enhancing financial co-operation between OPEC Member Countries.

19) To acknowledge the diversity and cultural wealth of our peoples, heirs to a legacy of thousands of years, and to promote enhanced cultural interaction among OPEC Member Countries, in order to strengthen their historical links. This would help broaden dialogue on matters of common interest.

20) To institutionalise the OPEC Summit of Heads of State and Government, to take place at regular intervals to be decided after consultation among Member Countries, with the aim of enhancing the ability of our Organization to extend the numerous successes which it has achieved in the first 40 years of its rich and remarkable history into the 21st century.


16 August 1990

“Time of Crisis...Venezuela

Current events in the Gulf again bring up oil-related issues between Venezuela and the US which always surface when Washington feels that there is an emergency. One wonders when long-lasting decisions will be taken.

Venezuela in the scenario...

There are changes occurring In the Gulf which affect the whole world situation including Venezuela. These events have direct effects on Venezuela: For the following reasons:-

1/ Venezuela has the largest petroleum reserves in the Western Hemisphere.

2/ Venezuela has been the main exporter in the Western Hemisphere for the last half century.

3/ Venezuela is one of the biggest suppliers to the US market.

4/ Venezuela is an OPEC Member.

These considerations put Venezuela in the centre of attention.

Venezuela has very large petroleum reserves and can take the long view and Is vitally interested In the world's position on oil. This is why disruptions in supply and both sudden and substantial price rises only appear to be in Venezuela’s interests. The truth is that the Venezuelan oil industry is against such short term "benefits".

Historicly, Venezuela as part of the Western Hemisphere has had traditional close ties with the US Administrations and with the major US oil companies. So it is only natural that Venezuela feels itself to be committed to being a reliable partner in times of emergency and expects reciprocity. This has been Venezuela's case and position for at least the last half century. There has not, however, been a corresponding understanding coming from Washington and the US oil industry about Venezuela's desires, needs or problems. The country has not yet been granted preferential treatment. Until just a few weeks ago Washington was reluctant to accept a Hemispheric Treaty.

During the Venezuelan Foreign Debt negotiations the US didn't show much understanding. Venezuela's enormously serious efforts to stabilize the Caribbean and Central America have obtained neither the sufficient recognition nor the sufficient gratitude that they merit.

The man in the street here is asking why once again Venezuela is expected to pull people out of the mud. Particularly since Venezuela is in no way responsible for the complex dilemma now occurring in the Middle East. And especially when major oil companies "are just plundering the US people” according to certain US Congressmen.

Venezuela and OPEC

In this context of "plunder" and since OPEC is usually held responsible for price hikes, it is time for people in the US to discover, the realities. OPEC have just agreed on US$ 21/b. and OPEC price an the 31st. July were less than US$ 18/b.. Now, given that OPEC hasn't decided an any changes in price or volume the market (including paper barrel speculators) has in 4 days pushed up the price to over US$ 28/b. squeezing the helpless consume.

Crucial decisions on production capacity expansion

Now it's a political request to increase production. Venezuela is responding positively. Once the danger is over, it could be again argued that the U.S. government doesn't import oil; that the oil companies do so and are free to choose their sources of supply.

Venezuela is about to make crucial decisions regarding the expansion of its petroleum industry's production capacity which, logically, once on stream would be looking at a very specific market: the U.S.A. This raises the questions of: What guarantees would Venezuela have if it spent all these millions of US dollars and what would happen to debt-ridden Venezuela with insufficient monetary reserves, low cash flow and many other very serious problems if these investments are made? Specifically, what will happen when the production capacity is there? What guarantees will Venezuela have that the US will import the export volume required or expected by the Venezuelan economy?

It also raises questions about "Orimulsion's potential market share in the power utilities sector. All this is negative for Venezuela.

The US economy has been approaching a recession. This trend is of the major ail companies) and heavy military spending (because of events in the Gulf). This situation will lead to smaller oil imports because the domestic oil industry in the US will be more efficient with prices much higher than US$ 20/b. and because an almost zero growth economy will require less oil. Additionally we have the environmental issue and concern about supplies. The sum of all these aspects will have adverse implications for oil in the US energy mix.

This brings up the need to look at the situation in a context of reciprocal security, an idea which takes importance when the Bush Administration is suggesting the setting up of a Hemispheric Common Market. Washington should listen and come to a balance en the matter. Here, fair play and correct and honest dealings can be the onlv rule of the game.

US Gratitude to Venezuela

The question is for how long can the US maintain its gratitude to Venezuela, and not turn to other suppliers as soon as the emergency or crisis is over.


Venezuela would find this disappointing. And let's not forget that those whose oil is being embargoed today don't feel happy about other people offering to step in with their oil.

These countries are going to return to the market sooner or later regardless of whether or not OPEC survives. Oil producers just as anyone else, have a memory for good and bad acts. They will definitely consider that increasing oil production and supplies under the present circumstances to the US is unfriendly. Venezuela might pay the price later when the sand of the "Desert Shield" has settled down. The US should bear this in mind.

A point think about

While usually a call for an OPEC conference is made by the respective ail ministers, it was the Venezuelan Foreign Minister that toured several OPEC Gulf and African states. He apparently didn't get a very enthusiastic response. This might explain Caracas's reluctance to a unilateral decision.

On 14th. August, Venezuelan President Carlos Andrés Pérez announced very important modifications to the country's petroleum policy in the light of, or the events in, the Gulf and the resultant question of hemispheric energy security.

He stated that Venezuela is prepared to:

1/ Increase production and oil exports by an additional 500,000 b/d. to help the US compensate for the shortfall due to the turmoil in the Gulf.

2/ Create a hemispheric strategic oil reserve to confront situations similar to what is occurring now. For this, Venezuela's production capacity will be gradually increased to 4 mill. b/d.. Perez said that this increase could only be achieved through financial help and hinted that the US should help to underwrite the cost of that programme.

Some people in the US took Perez's words to mean that Venezuela would immediately supply extra barrels. PDV also thought that, but found itself in an uncomfortable position because it seemed that Perez prefers to wait for a collective OPEC decision In this material.

Although one could consider that reciprocity entails bargaining. You don't get anything for nothing, even between friends.

True US-Venezuela reciprocity?

Now, there are voices in the US asking allies who are highly dependent an oil imports from the Middle East, such as Japan and Germany, to share the financial costs of the US military actions in that area. On the same basis, shouldn't Venezuela be entitled to ask the US to share the heavy burden of the investments it has to undertake in order to have enough oil supplies for its friends, specially the US?

Venezuela expects and merits being treated as a reliable ALLY.


November 1989

On his return from the Geneva OPEC meeting, Minister Armas asserted that no OPEC Member Country was interested in creating problems or causing damage to the market or prices, and that everybody was ready to make sacrifices to reach the objectives of market stability and remunerative prices. From 1st. October Venezuela’s quota was raised 88,000 b/d. Of this figure 40,000 b/d are condensates reclassified as light crude. Production for this last quarter is to be 1,812,000 b/d crude, 110,000 b/d condensates and 108,000 b/d gas liquids. The average price of OPEC crude in US$ 17 whereas Venezuela’s average is just under US$ 16 for the first three quarters of the year.

This entry was posted on 1 de junio de 2010. You can follow any responses to this entry through the RSS 2.0. You can leave a response.

Leave a Reply

Con la tecnología de Blogger.