Ecuador to Quit OPEC; Iran Irked by Output

OPEC, which looked in such good shape just a few days ago, finds itself in trouble again. Ecuador, one of its tiniest members, wants out of the 13-nation cartel because it’s too expensive to belong.

And Iran, one of the biggest members of the Organization of Petroleum Exporting Countries, is complaining that the cartel’s latest agreed-upon production levels will do little to punch up crude prices.

The disgruntlement “undermines the appearance of cohesion as a cartel,” said Ann-Louise Hittle, senior oil analyst at Lehman Bros. in New York.

Peter Bogin, associate director of oil markets at Cambridge Energy Research Associates in Paris, agreed: “It takes away a little bit of the polish.”

But an exasperated Hisham Nazir, Saudi Arabia’s oil minister, dismissed suggestions of disarray. “Why do you want OPEC to go through turmoil? What is this business about turmoil?”

The cartel’s latest troubles began shortly after it reached agreement late Thursday to keep pumping crude at current levels for the rest of the year.

With production steady and customers buying more oil ahead of winter, the cartel reasoned that it couldn’t go wrong. Prices would surely edge up a dollar or two a barrel, possibly hitting the target of $21 for a 42-gallon barrel.

But the deal had barely been struck when word filtered out that Iran was unhappy. Its minister, Gholamreza Aghazadeh, held a news conference to announce his objections. “OPEC,” he declared, “is not serious about a price increase.”

Iran wanted the producers to reduce pumping, which would limit supplies and force prices sharply higher in winter.

A few hours after Aghazadeh left the podium, Ecuador’s president, Sixto Duran Ballen, announced that his country was tearing up its membership card.

Ecuador’s oil minister, Andres Barreiro Vivas, had said earlier in Geneva that the country would wait until November to decide whether to withdraw, giving the group time to find a solution.

He insisted Friday that this was still the case, although at one point he confessed he wasn’t sure of his nation’s status in OPEC.

Financially strapped Ecuador wants to become an associate member so it can reduce its membership fees and pump in excess of its OPEC-set limit.

“I hope (we) will find a solution, but if the president has made his decision already, we can do nothing about it,” said Libya’s oil chief, Abdalla Salem el-Badri.

Other ministers said they would try to resolve the problem.

But even if Ecuador pulls out, Bogin said, “it’s not a really big loss for the organization.” Ecuador pumps 350,000 barrels a day, a drop in the bucket compared to the more than 8 million barrels a day produced by Saudi Arabia.

Barreiro Vivas said Ecuador wants to double production in the next few years. But analysts doubt the country could do so.

Ecuador joined OPEC in 1973 after holding associate status. As a full member, it pays the same dues as super-producer Saudi Arabia. This year’s fees amount to about $1.5 million for each nation. Ecuador has been behind in its payments for the last two years, sources said.