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Perhaps there is no coincidence at all that a week before the Organization of Petroleum Exporting Countries planned to meet in Beirut, Lebanon...four masked gunmen shot their way into a Western living compound in the coastal Saudi city of Khobar. But just as commando units stormed the building, three manage to escape. For yet another day, the unblinking eye descends on Saudi Arabia and it's oil production network. But even so, the Kingdom is only one of eleven members in OPEC. While the Saudis have the greatest capacity and reserves (effectively making them the "central bank" of petroleum production in the world), the other ten members avoid the same degree of scrutiny. So here it is: a guy to the other ten nations coming to Beirut. Aside from telling you how large a reserve they have, we'll also tell you if they will ask for a cut in production or an increase...as well as other important factors.

Indonesia The President's delegation isn't even a large producer of oil (4.7 billion in reserves) , but is still a crucial natural gas hub, as well as a prickly mix of religious and ethnic cultures bristling with the rising standard of living. Indonesia is likely to seek an increase insofar as the Americans and Australians keep the pot sweet. After the currency collapse in 1998, the Indonesians have to contend that if oil corrects itself in regard to inflation, they will recover from the devaluation sooner.

Venezuela Little Venice at 77 billion in reserves is actually America's closest supplier in OPEC. However, not soon after September 11, the State Department tried to knock off the left-leaning socialist President of Venezuela, Hugo Chavez. As a result, Chavez has no desire to appease the US anymore. Chavez was hoping to use oil revenue to bolster his economic reform package, but thanks to the meddling...there are lots of people on the street and not as many working in the refinery. For other Venezuelans...obviously fast moving oil trades with a high price is ideal, but if the factories are still idled, the Venezuelan contingent may be willing to lower the price.

Algeria The smallest producer in Africa at 11 billion in reserves, the Algerians were engaged with the French in coordinated anti-terror campaigns in the mid 90s. The war goes on in Algeria, but an election this year means that things are getting better. Like the Indonesians, the Algerians have a huge captive market for their much larger natural gas reserves, the EU. Therefore with the right incentive package, the Algerians will easily agree to an increase in production.

Libya Despite Libya's desire for rapprochement, this player at 36 billion in reserves called the increase in output a "mistake". Along with the Venezuelans, the Libyans may easily say that increasing production is foolish and that the curren ceiling is best. But what's the surprise...Colonel Qaddafi's odd "republic" where is at once Simon Bolivar and Francisco Franco has no other viable money-makers other than pumping the black stuff. (Remember that bananas for gasoline trade he proposed to Caribbean countries?)

Nigeria Energy Secretary Spencer Abraham has declared that the Nigerians are onboard with a rise in production. Africa's most populous state has the same level of reserves as Libya with only four times as many people. In fact, the oil-rich (and largely Christian) provinces of Nigeria seceded in 1968 to form Biafra. As a result, US military might made sure that the Nigerian military itself was strong enough to prevent a situation like that. While the country remains a mess, the Nigerians are all for an increase. They have quicker access to both Europe and the United States than the Asian Arab states do. Secondly, the Americans have been poking around equatorial Guinea and Elf has been quietly increasing itself in Angola. Eventually Nigeria will find itself at a disadvantage and wants to capitalize now.

Kuwait So too did the Kuwaitis give Spencer a nod and wink towards increasing production. With reserves at 96 billion, you can understand why Saddam Hussein invaded in 1991. Still, nearly all of the reconstruction materials for Iraq enter through Kuwait's port. Add in the effect of reconstruction boondooglers and it seems clear that Kuwait will allow a measured increase.

United Arab Emirates This is truly odd state of affairs. There are actually seven emirs who are cobbled together into one state. The reason Abraham also has said the U.A.E. is onboard with an increase is that at 90 odd billion the folks in Abu Daubi can flip the switch faster than any nation besides the Saudis. But remember, the U.A.E has worked hard to build Dubai into the economic hub of the Middle East: not only do they sponsor Al-Arabiya TV but they subsidize Emirates Airlines while building lots of other special economic zones for foreign investment. As jet fuel is a costly expense, the U.A.E. has a win-win scenario by allowing for more production.

QatarAcross the bay is the U.A.E's rival Qatar, with it's own TV station, Al Jazeera, it's own airline...Qatar Airways...and a massive construction program to harvest natural gas reserves as well as the US military complex created in light of the abandonment of Prince Sultan Air Force Base in Saudi Arabia. Also at only 15 billion in reserves...the Qataris can't really ramp up and likely want to stay put, but probably will not fight that hard.

Iran At just under a hundred billion in oil reserves, Iran is almost as big a petroleum prize as Iraq. However, they have no love lost for the meddlesome West and therefore don't really care how high it goes. But again, only Libya and Venezuela share this line of thinking and converting three more people to see it their way could be difficult.

Iraq Who is "Iraq"? The local Iraqi population certainty does not want an increase just yet because it's infrastructure yet. However, once the oil network is running again, the Iraqis will be cagey about what target price they would want. Their economy can be diverse, and Iraq's military was exceedingly expensive to maintain. As a result, strong gas revenues will help Iraq get off the ground quickly and ably. Yet, part of the reason the US is in Iraq is to deflate OPEC's leverage. As long as the US exerts any influence...the possibility is strong that Iraq will support increases in production in spite of itself.

Meanwhile, the mahunt continues in the Kingdom of Saudi Arabia. With many delegations arriving in Beirut already there certainty will be some interesting conversation Wednesday night at dinner.

posted by Thomas at 3:38 PM 0 comments