Venezuela plans to offer a strong argument against what it considers "unfair" aspects of the Organization of Petroleum Exporting Countries' current production quota system.
It will make the argument at OPEC's midyear ministerial conference June 5.
Venezuela, a charter member of OPEC, wants a redefinition of quotas to cover only what member countries produce for export and exclude what they produce for domestic consumption.
During a May 2-3 visit to Venezuela by OPEC conference Pres. Ammar Makhloufi and OPEC Sec. Gen. Rilwanu Lukman, Venezuelan Energy and Mines Minister Erwin Arrieta said his country has raised the issue with OPEC authorities and will present the quota redefinition proposal at the ministerial conference.
The OPEC officials are touring member countries in preparation for the conference. They have visited several Persian Gulf states and as of last week were scheduled to travel to Nigeria and Libya.
Arrieta's comments
"We have maintained for some time that quotas represent a position that separates countries that have large domestic consumption from those that have small consumption," Arrieta said. "But, of course, this is a matter that has to be discussed and approved by the conference."
The Venezuelan minister labeled as "unfair" the current OPEC quota system under which production for export and domestic consumption is combined and used as the same measure for large and small oil consumers alike in the organization.
Venezuela, which has an OPEC quota of 2.359 million b/d, supplies about 378,000 b/d of liquid hydrocarbons to its domestic market.
In recent months, Venezuela has been described by independent sources as a major quota violator. But Arrieta said his country's current production stands at 2,370,000 b/d, only 11,000 b/d above quota.
Arrieta said he is "very optimistic" his country's proposal for a redefinition of the production quota system will be approved by OPEC ministers.
Arrieta also said OPEC in the future will have to take a harder look at new issues such as the role of powerful state oil companies that have emerged among the group's members, environmental matters, high energy related taxes levied in consumer countries, globalization, and a more meaningful producer-consumer dialog.
Lukman responds
The Venezuelan proposal "is a matter that is going to be actively considered by our organization and is going to be a point in the order of the day at the conference," Lukman said.
"OPEC experts have met and studied different figures and have presented their reports, which have been sent to the ministers of our member countries."
Lukman also said, "I believe that since they have not had the possibility of studying those reports, it would be premature for me to say something in that regard.
"The level of quotas is something that is set by the conference based on existing circumstances at the moment of the conference. Therefore, it does not seem appropriate to speculate at this moment what could happen at the conference in June, since we are still a full month away from that-above all, in view of the fact the market changes almost daily."
OPEC oil ministers at the June conference will "decide on whether the ceiling of the quota system must be changed-in what direction, upward or downward-what is necessary to ensure the stability of the market and prices that are fair for our members...The final goal for our organization is to ensure income for our members," Lukman said.
Iraq's return
Makhloufi directed his comments to the eventual return of Iraqi oil supplies to the world market.
Iraq is unable to sell its oil or conduct other trade on the world market because of United Nations sanctions against it stemming from Iraq's 1990 invasion and occupation of Kuwait. U.N. and Baghdad officials recently ended a third round of talks aimed at allowing limited oil sales by Iraq to raise funds for humanitarian supplies for its sanctions-battered population.
Makhloufi said, "Iraq is one of the countries we visited when we made our tour of the (Persian) gulf countries. On that occasion we spoke with Iraq and with all our OPEC partners regarding the preparatory work that is necessary and is being done for the return of Iraq to the world oil market.
"Currently, this matter is one of our priorities, and I must say that all countries that we have visited, including Venezuela, at this moment have said they are willing and ready to resolve this matter as soon as Iraq receives authorization to resume exporting.
"Therefore, OPEC is preparing for that eventuality...(which) is something sufficiently important for us to believe that the return of Iraq to the world market will not disturb the market. We are preparing ourselves for that."
Turning to the possibility of OPEC seeking a closer relationship with consumers and non-OPEC oil producing countries, Makhloufi said, "OPEC is an organization that does not try to seek a conflict but rather is an organization that had been established to reconcile problems and conflicts.
"OPEC is aware of the changes that are occurring in the world economy and is studying the importance of those changes...OPEC always has sought the stability of markets. Of course, OPEC also seeks to defend the interests of its members...but we also seek a rich and fruitful dialog among our own members and with producers that are not members of OPEC, as well as with oil consumers."
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