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August 13, 2007 / 3:57 PM / 11 years ago

New faces but policies set to stay at OPEC

By Janet McBride - Analysis

LONDON (Reuters) - Less than a month before OPEC meets to set oil output for peak winter demand, countries accounting for almost a third of production are either without an energy minister or getting used to a new one.

OPEC’s second biggest producer Iran installed a caretaker oil minister on Sunday after President Mahmoud Ahmaninejad abruptly announced the departure of Kazem Vaziri-Hamaneh.

Kuwait’s oil portfolio is also in temporary hands, with no permanent appointment in sight, after Sheikh Ali al-Jarrah al-Sabah resigned at the end of June.

A new president and new energy team have taken charge in Africa’s biggest producer Nigeria, where kidnappings and attacks have plunged the oil industry into crisis.

Iraq’s government is on the brink of collapse and Hussain al-Shahristani’s days at the oil ministry may be numbered.

In any other organization, decision-making could be expected to seize up. But Saudi Arabia oils the machinery of OPEC and the kingdom’s energy portfolio is secure in the hands of Ali Al-Naimi, oil minister of the world’s top exporter since 1995.

“My take on it is that Ali Al-Naimi is running the show and I don’t think any of these changes will alter that,” said Paul Tossetti, director of market analysis at consultants PFC Energy.

When OPEC meets on September 11 in Vienna, Naimi will need all his acumen to balance consumer calls for more oil against the very real concern problems with U.S. sub-prime loans are poisoning other markets and asset classes.

Manouchehr Takin, senior petroleum upstream analyst at the Centre for Global Energy Studies in London, said modern OPEC policy was solidly founded on market economics. The days of political grandstanding were consigned to the past.

“It is much more business oriented and less subject to the vagaries of changing political shades,” he said.

“Of course it would be better to have ministers with full portfolios because deputies have less authority. But decisions are prepared and analyzed by technical experts so the fact that the minister is not present is not that critical.”

“And the so-called kingpin is the Saudi oil minister and Saudi oil policy because Saudi Arabia has more than 11 million barrels per day of production capacity.”

Paul Horsnell, managing director at Barclays Capital, said OPEC was at its most potent when Saudi Arabia, Iran and Venezuela were in agreement over policy direction. “And in terms of the broad sweep of overall policy, that is the case now.”

BALANCING ACT

At two meetings late last year OPEC agreed to reduce oil supplies by a total 1.7 million barrels per day, or roughly six percent. The 10 members that signed up to the deal -- Iraq and new member Angola stand outside it -- have broadly adhered to it.

More recently consumer nations have been pleading for OPEC to release more oil, fearful prices that hit a record $78.77 a barrel on August 1 will hurt economic growth.

But oil producers are warily watching world financial markets, where waves from the U.S. sub-prime loans market wiped billions of dollars off share prices and 11 percent off oil this month.

OPEC’s 12 members pump roughly 30 million barrels per day into the 85 million bpd world market and have another three million bpd of spare capacity, most of it in Saudi Arabia.

They have rebuffed consumer calls for more oil, arguing crude supplies are ample and a shortage of global refining capacity has contributed to high prices.

Geoff Pyne, energy consultant at enerpyltd.com, said the absence of some permanent ministers may play into the hands of those who favor leaving output unchanged for now.

“It makes it more likely that they will do nothing,” he said. “The global economy provides them with an excuse not to increase. They don’t want an increase in production that might collapse prices.”

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