In spite of strenuous opposition from Saudi Arabia, member countries of the Organisation of Petroleum Exporting Countries (OPEC) agreed at a meeting in Quito, Ecuador, to impose a two percent increase in the royalties they levy on major oil companies.
In spite of strenuous opposition from Saudi Arabia, member countries of the Organisation of Petroleum Exporting Countries (OPEC) agreed at a meeting in Quito, Ecuador, to impose a two percent increase in the royalties they levy on major oil companies. Saudi Arabia did not associate itself with the decision, which will result in an increase of less than one percent to the oil revenues of the producers.
Delegates from the 13 member countries flew in for the three-day meeting on Saturday (15 June). Dr. Jamshid Amouzegar, Finance and Oil Minister of Iran, headed the Iran delegation. After Saudi Arabia, Iran is OPEC's second biggest producer. Its delegation was opposed to the Saudi moves to prevent a price rise. The Venezuelan Mining Minister, Senor Valentin Hernandez, also argued strongly for a higher posted price and a rise in the rate of tax levies on oil companies.
The delegates were met at Quito airport by the Ecuador Minister of Natural Resources, Jarrin Ampudia.
The Nigerian delegation, headed by Mr. Shettima, was one of the five countries which fought hard for a far larger increase in the posted price of oil. Posted prices are the yardstick used for calculating the taxes and royalties which the producer governments charge the oil companies for extracting oil and which make up more than 95 per cent of the cost of crude oil. Algeria, Libya, Kuwait and Venezuela were also anxious for a larger increase and a steep rise on oil company taxes.
On Tuesday (18 June) at the end of the meeting, Dr. Amouzegar stressed that OPEC's eventual decision to exercise restraint at a time of galloping inflation on their imports had come from a genuine concern that the world had not yet adjusted to the new higher levels. But he warned that if by September the indusrialised countries had shown no sign of holding down the prices of manufactured goods, then OPEC would probably follow the overall rate of inflation and increase oil prices by 10 per cent or more.