OPEC's Dollar Concerns Overshadow Environmental Push

Nov. 18 -- The falling U.S. dollar's effect on oil revenues overshadowed Saudi Arabia's promises to fight global warming at this weekend's Organization of Petroleum Exporting Countries summit in Riyadh.

Saudi Arabia had to fight off an attempt by Iran and Venezuela to get the group to discuss pricing oil in different currencies. Saudi Arabia, Kuwait, Qatar and the United Arab Emirates together committed $750 million to research climate change, while OPEC leaders pledged to cut emissions from oil and gas production.

The dollar's 10 percent decline this year has cut the buying power of revenue from record oil prices above $90 a barrel. A further drop may harden OPEC's reluctance to raise supply in a bid to ease prices. Ministers at the summit said the oil market was well-supplied and recent gains were due to speculation and beyond the group's control.

``OPEC is in a price paralysis conundrum,'' said John Sfakianakis, chief economist at Saudi British Bank, a unit of HSBC Bank Plc. ``They do care about the dollar, but if they say publicly they worry it will show they care even more.''

Venezuelan President Hugo Chavez said that OPEC finance ministers will study the dollar's decline. Saudi Foreign Minister Saud Al-Faisal confirmed that the organization will enhance cooperation between its finances ministers. He didn't say whether this would include a discussions of pricing oil in another currency.

`Worthless Paper'

``They get our oil and give us a worthless piece of paper,'' said Iranian President Mahmoud Ahmadinejad at press conference today. ``The dollar has no economic value.''

Gulf Arab countries, most of whose currencies are mostly pegged to the U.S. dollar, will jointly consider a revaluation in December in a bid to combat inflation, Abdul Rahman al- Attiyah, the secretary general of the Gulf Cooperation Council said in Riyadh today.

The council includes OPEC members Saudi Arabia, Kuwait, the United Arab Emirates and Qatar as well as Bahrain and Oman.

Saudi Arabia has no plans to revalue the Riyal against the U.S. dollar or fix its value to a basket of currencies, Finance Minister Ibrahim al-Assaf said today in Riyadh

The final declaration from OPEC's third heads of state summit reiterated the group's commitment to ensuring stable energy supplies and promise to reduce carbon emissions from oil and gas production. ``OPEC will continue providing adequate, timely, efficient, economic and reliable petroleum supplies to world markets,'' it said.

Fund Pledges

Saudi King Abdullah, opening the summit yesterday, announced a contribution of $300 million to setting up a fund that will study ways to reduce carbon dioxide emissions by developing techniques such as gas underground sequestration. Qatar, Kuwait and the United Arab Emirates agreed to put $150 million each to the fund, Al-Faisal said.

``The environment is one of the most important issues in the global political environment,'' Saudi British Bank's Sfakianakis said. ``OPEC cannot be seen to be ignorant of climate change.''

The leaders ignored calls from U.S. Energy Secretary Samuel Bodman to increase production, leaving a decision on the output to the energy ministers' meeting in Abu Dhabi on Dec. 5.

The producers' club, which supplies more than 40 percent of the world's oil, is gaining influence on the back of high prices. Importing nations have transferred $3 trillion more to OPEC than they would have since 2001 had oil prices stayed near $20 a barrel, according to Goldman Sachs Group Inc.

Ecuador will re-join Dec. 5 as the group's 13th member. The South American nation left the organization 15 years ago.