04/09/2000 14:08 - (SA) Opec speeds end of oil era Richard Mably

The price of a barrel of benchmark Brent crude oil since the beginning of the year. Opec meets on Sunday to decide whether to up output to cool sizzling oil prices close to 10-year highs. London - Saudi Arabia's Sheikh Ahmed Zaki Yamani is in little doubt - petroleum prices now spiralling out of control will prove a last hoorah for Opec oil power.

For the former Saudi oil minister, the return to $30 a barrel crude has only hastened the day when the Organisation of the Petroleum Exporting Countries will be left staring at untouched fuel reserves, marking the end of the oil era.

"Opec has a very short memory. It will pay a heavy price for not acting in 1999 to control oil prices. Now it is too late," he said in an interview with Reuters.

"The Stone Age came to an end not for a lack of stones and the oil age will end, but not for a lack of oil."

As Saudi oil minister from 1962 to 1986, Yamani, now 70, was the embodiment of Arab oil power.

The architect of a dramatic upheaval in the world's economic order during the 1970s' oil price explosions, his name became synonymous with Opec.

The cartel this weekend marks the 40th anniversary of its birth in Baghdad on September 10, 1960. Petroleum ministers meet on Sunday to decide output policy for this winter.

Yamani says it is too late now for Opec to refill petroleum product tanks in the West where inventories of heating oil are running short for the northern hemisphere's cold months.

"I think prices might go a bit higher this winter but further ahead in 2001 prices will start to come down and longer term it is horrible for Opec," he said.

TECHNOLOGY TO SQUEEZE OPEC

Within 20 years, he predicts, technology will have cut deep into demand for transport fuels.

Crude will slump even more heavily than the single-digit prices seen during the last glut, in 1998.

This year's oil price scare will feed rival non-Opec production, suppress demand and, most damagingly for Opec, breed new fuel technologies.

He sees hybrid engines for automobiles and hydrogen fuel-cells drastically cutting the consumption of gasoline while big new finds lift crude flows from non-Opec nations.

"Technology is a real enemy for Opec. Technology will reduce consumption and increase production from areas outside Opec."

"The real victims will be countries like Saudi Arabia with huge reserves which they can do nothing with - the oil will stay in the ground for ever."

Opec, said Yamani, had failed to learn the lessons of the series of gluts and shortages which have marked its turbulent history.

Its leading negotiator during the oil price rises of Opec's heyday, Yamani says his warnings against pushing crude too high went unheeded.

"I will never forget. It was 1979. I was in Caracas and I said that at this price - it was $28 a barrel at the time - Opec production will drop, Opec countries will fight each other. I said production has to be raised to lower prices. They said I was crazy."

While Saudi Arabia, sitting on 100 years of reserves, now favours prices no higher than $25 a barrel, fellow Opec members remain keen to squeeze their customers for as much short-term revenue as possible.

"There are some members in Opec who always tried to resist extra production - like Venezuela, Iran, Libya. In Opec, from day one that has not changed," said Yamani.

LEADING ROLE IN PRODUCER SOVEREIGNTY

Yamani remains proud of his role in wresting power over petroleum revenues from the oil majors, the assertion of Opec's central objective - sovereignty by the exporting countries over their resources.

He cites the Tehran Agreement of February 1971, when the oil companies abandoned their long-standing 50-50 share of revenues to cede the Gulf producers a majority return of 55%.

"That was a big step forward for Opec," he said.

And then on October 16, 1973 just days after the start of the Arab-Israeli war, Yamani and five other Gulf Opec petroleum ministers took charge for the first time of the price of oil.

Unilaterally they lifted posted crude prices, previously set by the oil companies, by 70% to over $5 a barrel.

"Prices were now fixed by producers. Now we were masters of our own resources," remembers Yamani.

The following day Saudi King Faisal sanctioned the Arab oil embargo to punish the West for its support of Israel.

Within months oil prices had trebled and the industrialised world was tipped into the sort of recession which some economists fear could be repeated again if oil prices do not ease soon.

CARLOS THE JACKAL

Yamani, born in Mecca in 1930, remains a devout Muslim despite daunting personal experience.

He was present in 1975 when an assassin shot his mentor, Saudi King Faisal.

Later that year he was among ministers taken hostage and held to ransom at Opec headquarters in Vienna by the guerrilla Ilich Ramirez Sanchez, alias Carlos 'the Jackal'.

Taken on flights to Algiers, Tripoli and then back to Algiers Yamani was told that he and the Iranian oil minister irrevocably had been sentenced to death.

"Carlos told me I would die. I was sure I would die. I wrote my will. I was prepared."

Famed for his softly-spoken negotiating skills, Yamani also was a favourite with the press.

"Often they knew more about Opec affairs then the ministers they were questioning," he said.

http://news.24.com/News24/Finance/0,1466,2-8_906567,00.html

-- Martin Thompson (mthom1927@aol.com), September 04, 2000

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I always did have a lot of respect for this guy. Now he is spouting nothing but truisms again.

-- Uncle Fred (dogboy45@bigfoot.com), September 04, 2000.