Venezuela Says Unnamed EU Country Tapping Oil Reserve

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Venezuela Says Unnamed EU Country Tapping Oil Reserve (Update1)

By Joshua Schneyer, Stephen Voss, Nicholas Benequista, Peter Wilson and Alex Kennedy

Caracas, Sept. 27 (Bloomberg) -- At least one European country is releasing oil from its strategic reserves to help meet demand, without disclosing the measure to other countries, OPEC President Ali Rodriguez said, without identifying the country.

Rodriguez said the release of an unspecified amount of oil from European ``emergency'' reserves posed a threat to the Organization of Petroleum Exporting Countries' goal of keeping the price of its oil between $22 and $28 a barrel.

``In Europe -- and I prefer not to name names -- at least one country is placing its reserves without telling anyone about it,'' Rodriguez told reporters in Caracas. ``It's the kind of thing that provokes speculation and can disturb the oil market.''

EU finance ministers are set to meet Friday to consider releasing oil from their strategic reserves to help reduce energy prices. The meeting follows last week's decision by U.S. President Bill Clinton to release 30 million barrels of oil over the next month from the U.S. Strategic Petroleum Reserve.

Venezuelan President Hugo Chavez earlier urged the European Union not to tap the bloc's strategic oil reserves in a bid to lower crude prices.

``I wouldn't use the reserves in this case,'' Chavez told reporters at the Caracas International Airport, where he greeted heads of state from OPEC. ``This isn't an extraordinary situation.''

OPEC leaders are in the Venezuelan capital for a two-day summit that ends Thursday, the first such meeting since 1975.

Clinton's decision to tap the U.S. strategic reserve, coupled with OPEC's decision to increase its output quota by 800,000 barrels a day beginning Oct. 1, have pushed oil prices down from their highest level in almost 10 years. A decision by the EU to tap its strategic petroleum reserves would add more oil to the market. Price Drop

``Supply isn't the problem,'' Chavez said. ``Speculation and high taxes (in consuming countries) are.''

Oil has dropped more than 15 percent since reaching a near 10- year high of $37.80 a barrel last Wednesday. Today, crude oil for November delivery rose as much as 40 cents a barrel, or 1.3 percent, to $31.90 in electronic trading on the New York Mercantile Exchange.

A fair price for oil is between $22 and $28 a barrel, which is OPEC's price band, Chavez said.

``We hope prices will stabilize there in the coming months,'' he said.

Rodriguez, who is also Venezuela's oil minister, warned earlier that an EU decision to tap its reserves could lead OPEC to reconsider its production strategy.

Rodriguez said the EU move ``could possibly provoke a fall in oil prices so large that it would oblige the OPEC to take a decision.''

Earlier, Agence France-Presse reported Spanish Prime Minister Jose Maria Aznar is in favor of the EU tapping its oil reserves.

``It would be good, given the situation on the oil market and the decisions taken by the Americans, that Europe make its own decisions to reduce tension on oil markets and to lower the price of petrol,'' Aznar was quoting as saying in the report.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=blk&s=AOdGDchZdVmVuZXp1

-- Carl Jenkins (Somewherepress@aol.com), September 27, 2000


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