Venezuela under pressure for opposing Iraq occupation front as full member

["Fred Feldman" <ffeldman@xxxxxxxxxxxxxxxx>]

OPEC Mediates Venezuela-Iraq Dispute
By BRUCE STANLEY


OPEC members struggled Tuesday to prevent a dispute over Iraq's
participation in their oil policy talks from causing a damaging rift
and impeding their plan to set production targets for the coming
months.

Cartel members, excluding Iraq, failed to resolve an impasse between
Venezuela and Iraq during a late Tuesday meeting, OPEC sources said.
The 10 members of the Organization of Petroleum Exporting Countries
heard Venezuela's position that Iraq, a cartel founding member, should
not attend the group's formal meeting Wednesday because its government
has no U.N. recognition.

Iraq is attending OPEC talks for the first time since the toppling of
Saddam Hussein, and its presence was seen as a sign of growing
international acceptance of its U.S.-backed interim government.

However, Venezuela's minister of energy and mines, Rafael Ramirez,
said Iraq could only attend on an informal basis. Iraqi oil minister
Ibrahim Bahr al-Uloum countered that he and his delegation expected to
represent Iraq as a full, voting member of the group.

The 10 members were unable to agree.

The differences threatened to flare into a major dispute and interfere
with OPEC's need to set output policy for the year's busy fourth
quarter.

Despite a recent slide in crude prices, OPEC should hold oil output
steady for the next few months and meet again in December to consider
cutting production ahead of a seasonal downturn in spring demand,
Kuwait's oil minister said.

Kuwait is "very worried" about the 14 percent decline in prices so far
this month, but its oil minister, Sheik Ahmed Fahd al-Ahmed Al-Sabah,
joined several other OPEC delegates in calling for the group to leave
output unchanged for now.

Al-Sabah said he believed Iraq would be allowed to attend Wednesday's
formal meeting as a full member because Venezuela was the only one
demurring.

Wednesday's OPEC meeting is at the group's Vienna headquarters.

OPEC secretary-general Alvaro Silva predicted that OPEC, which
supplies about a third of the world's crude, would hold its output
ceiling steady at 25.4 million barrels a day for the rest of the year.
Some members, including Saudi Arabia and Indonesia, have expressed a
similar view.

"I think we have to continue with the same production that we have
now" and monitor the oil market closely in coming months, al-Sabah
said upon his arrival at a hotel in the Austrian capital. December
would be "a good time" to reassess supply and demand for crude, he
said.

United Arab Emirates' Oil Minister Obaid Al-Nasseri, speaking earlier,
said there appeared to be "no big reason" for OPEC to adjust its
output at this meeting.

Earlier fears that Iraq might quickly restore its prewar output and
glut the market with crude have all but disappeared. Sabotage of
Iraq's oil pipelines continues to crimp its exports, and with Iraq's
recovery taking much longer than expected, several OPEC members have
said the group should continue pumping at current levels leading into
the peak winter heating oil season.

Given the large number of oil ministers who have already stated a
preference for not changing output, a decision by OPEC to do anything
different would be "irresponsible," said Yasser Elguindi of Medley
Global Advisors, a New York-based consultancy.

"It would take something dramatic at this point for them to change
their position, and the market would not appreciate it," Elguindi
said.

OPEC's benchmark crude price stood at $24.82, the lowest since May 8.
Despite falling, prices remain within OPEC's target $22-$28 price
range.

Iraq hasn't attended an OPEC meeting since Saddam's defeat. It hasn't
participated in OPEC quota agreements since the United Nations imposed
sanctions in 1990 to punish Baghdad for invading Kuwait.



Copyright 2003 Associated Press. All rights reserved. This material
may not be published, broadcast, rewritten, or redistributed.




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