By Steven Mufson
Washington Post Staff Writer
Monday, November 19, 2007
RIYADH, Saudi Arabia, Nov. 18 -- With crude oil prices at $100 a barrel and much of the world clamoring for relief, the Organization of the Petroleum Exporting Countries ended a two-day summit Sunday by pledging $750 million for research into climate change technology but without making any commitment to increase oil output at this time.
The group's final declaration was overshadowed by an explosion at a Saudi natural gas pipeline, where officials said maintenance work was being done, and by a news conference Sunday in which Iranian President Mahmoud Ahmadinejad warned the United States that "if someone has the audacity to want to harm Iran, the response by Iran will make them very sorry."
But Ahmadinejad said he did not expect any conflict because he did not think that the United States could take such action. He discounted such talk as a sign of U.S. frustration with what he called its "failure" in the region.
The Iranian leader also dismissed U.S. economic sanctions against Iran, saying that the most recent measures taken against leading Iranian banks and companies controlled by the Revolutionary Guard would have little effect on the country. "The Americans are only sanctioning themselves and European companies," he said.
Saudi Arabia's foreign minister, Prince Saud al-Faisal, recently tried to defuse the dispute between Iran and Western powers over Iran's nuclear program. In an interview with the Middle East Economic Digest, Faisal proposed that a consortium of Persian Gulf states build a uranium enrichment plant outside the Middle East, possibly in Switzerland, to supply nuclear fuel to nuclear plants across the region.
Ahmadinejad politely said that "we welcome any constructive proposals, especially when they are given to us by our brothers and friends" and said that Iran would "study such proposals closely." But he added that "from our point of view, the issue of Iran's nuclear program is finished." He said that "the Americans have to come to terms with this new reality."
Saudi and OPEC officials did their best to prevent the summit from becoming a platform for politics. Residents of Riyadh were given the days off, and normally congested roads of the Saudi capital were quiet. The OPEC leaders' working lunch Sunday was relatively brief and closed to observers.
"It is an economic organization," said OPEC Secretary General Abdullah al-Badri. He said that when he was Libya's oil minister years ago, political issues jumped to the front of OPEC meetings. But he said that for the past several years the meetings have focused on supply and demand.
"If they want to change to something else, this is up to the member states to change it," he said.
At the last OPEC summit in Caracas, Venezuela, in 2000, member countries decided their leaders should meet more often, and Saudi Arabia agreed to host this summit. The date had been set for months, long before oil prices mounted their latest ascent to about $95 a barrel.
But with prices high, OPEC officials spent the week asserting that oil inventories were ample and that financial investors and speculators were driving up the price. They urged Western regulators to make oil markets such as the New York Mercantile Exchange more transparent.
"It's not a shortage of supply," Badri said. He said OPEC above all wanted prices to be stable.
OPEC oil ministers could still decide to modestly boost production at their Dec. 5 meeting in Abu Dhabi, United Arab Emirates, if prices remain very high, but Badri said that there was no point in doing so if new supplies were simply going to go into inventories.
"We will add more oil if we know that the oil will go to the refineries," he said, noting that U.S. refineries were operating at 87 percent of capacity. "But we will not add more oil if it is going to go to stocks."
In addition, several officials including Saudi Arabia's King Abdullah argued that $100 a barrel for oil was a reasonable price when adjusted for inflation. Privately, however, several officials said they wished prices would plunge long enough to discourage investments in alternatives that have become economically viable as oil prices have risen.
OPEC officials also spent a great deal of time discussing climate change.
"Oil-producing countries feel that they are an endangered species in the climate change debate," said Yvo de Boer, executive secretary of the U.N. Framework Convention on Climate Change. De Boer was here to talk to OPEC officials four days ago.
The 1997 Kyoto Protocol, which mandates global reductions in carbon emissions, made special provisions exempting oil-producing countries from emissions targets. Now OPEC is worried that a new international accord could cramp fast-growing Middle East economies, where oil use is rising more than 4 percent a year. And the oil cartel is concerned that a broader cap-and-trade system for greenhouse gas emissions could place heavy costs of petroleum products and reduce consumption.
While declaring its opposition to such plans, OPEC said it took climate change seriously. Saudi Arabia pledged $300 million for research, citing the potential for carbon capture-and-storage technology. Kuwait, the United Arab Emirates and Qatar each promised to give $150 million.
Separately, an explosion took place at a Saudi natural gas pipeline, killing 28 people and injuring many others. Saudi Oil Minister Ali al-Naimi said another dozen people are missing.
The state oil company, Saudi Aramco, said that the explosion took place where maintenance work was being done on new tie-ins for the gas pipeline, about 19 miles from the Hawiyah gas plant. The location is remote, far from the nation's sensitive export facilities. The explosion will not effect oil supplies, Naimi said.