[NYTr] OPEC interested in replacement for dollar

[All the News That Doesn't Fit]

[... but they won't admit it publicly. Except for Ahmadinejad and
Chavez and possibly Correa. - NYTr]

AP via Yahoo - Nov 18, 2007
http://news.yahoo.com/s/ap/20071118/ap_on_bi_ge/opec

OPEC interested in replacement for dollar

By Sebastian Abbot
Associated Press

RIYADH, Saudi Arabia -- Iranian President Mahmoud Ahmadinejad said
Sunday that OPEC's members have expressed interest in converting
their cash reserves into a currency other than the depreciating
U.S. dollar, which he called a "worthless piece of paper."

His comments at the end of a rare summit of OPEC heads of state
exposed fissures within the 12-member cartel -- especially after
U.S. ally Saudi Arabia was reluctant to mention concerns about the
falling dollar in the summit's final declaration.

The hardline Iranian leader's comments also highlighted the growing
challenge that Saudi Arabia, the world's largest oil producer, faces
from Iran and its ally Venezuela within the Organization of Petroleum
Exporting Countries.

"They get our oil and give us a worthless piece of paper," Ahmadinejad
told reporters after the close of the summit in the Saudi capital
of Riyadh. He blamed U.S. President George W. Bush's policies for
the decline of the dollar and its negative effect on other countries.

"All participating leaders showed an interest in changing their
hard currency reserves to a credible hard currency," Ahmadinejad
said. "Some said producing countries should designate a single hard
currency aside from the U.S. dollar ... to form the basis of our
oil trade."

Oil is priced in U.S. dollars on the world market, and the currency's
depreciation has concerned oil producers because it has contributed
to rising crude prices and has eroded the value of their dollar
reserves.

Saudi Arabia's King Abdullah had tried to direct the focus of the
summit toward the question of the effect of the oil industry on the
environment, but he continuously faced challenges from Ahmadinejad
and Venezuelan President Hugo Chavez.

Iran and Venezuela have proposed trading oil in a basket of currencies
to replace the historic link to the dollar, but they had not been
able to generate support from enough fellow OPEC members b many of
whom, including Saudi Arabia, are staunch U.S. allies.

Both Iran and Venezuela have antagonistic relationships with the
U.S., suggesting their proposals may have a political motivation
as well. While Tehran has been in a standoff with Washington over
its nuclear program, left-wing Chavez is a bitter antagonist of
Bush.

During Chavez's opening address to the summit on Saturday, the
Venezuelan leader said OPEC should "assert itself as an active
political agent." But Abdullah appeared to distance himself from
Chavez's comments, saying OPEC always acted moderately and wisely.

A day earlier, Saudi Arabia opposed a move by Iran on Friday to
have OPEC include concerns over the falling dollar included in the
summit's closing statement after the weekend meeting. Saudi Arabia's
foreign minister even warned that even talking publicly about the
currency's decline could further hurt its value.

But by Sunday, it appeared that Saudi Arabia had compromised. Though
the final declaration delivered Sunday did not specifically mention
concern over the weak dollar, the organization directed its finance
ministers to study the issue.

OPEC will "study ways and means of enhancing financial cooperation
among OPEC ... including proposals by some of the heads of state
and governments in their statements to the summit," OPEC Secretary
General Abdalla Salem el-Badri said, reading the statement.

Iran's oil minister went a step further and said OPEC will form a
committee to study the dollar's affect on oil prices and investigate
the possibility of a currency basket.

"We have agreed to set up a committee consisting of oil and finance
ministers from OPEC countries to study the impact of the dollar on
oil prices," Gholam Hussein Nozari told Dow Jones Newswires.

Iraqi Oil Minister Hussein al-Shahristani said the committee would
"submit to OPEC its recommendation on a basket of currencies that
OPEC members will deal with." He did not give a timeline for the
recommendation.

The meeting in Riyadh, with heads of states and delegates from 12
of the world's biggest oil-producing nations, was the third full
OPEC summit since the organization was created in 1960.

The run-up to the meeting was dominated by speculation over whether
OPEC would raise production following recent oil price increases
that have approached $100. But cartel officials have resisted
pressure to increase oil production and said they will hold off any
decision until the group meets next month in Abu Dhabi, United Arab
Emirates.

They have also cast doubt on the effect any output hike would have
on oil prices, saying the recent rise has been driven by the falling
dollar and financial speculation by investment funds rather than
any supply shortage.

During his final remarks, el-Badri stressed he was committed to
supply -- but did not mention changing oil outputs.

"We affirm our commitment ... to continue providing adequate, timely,
efficient, economic and reliable petroleum supplies to the world
market," he said.