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Oil-producing Nigeria, Angola consider diversifying from dollar

Section: Daily Dispatches

Saudi Arabia Not Alone
Defending Dollar in OPEC

By Anchalee Worrachate and Zainab Fattah
Bloomberg News Service
Saturday, November 17, 2007

RIYADH, Saudi Arabia -- Saudi Arabia's decision to exclude the falling dollar from discussions at this weekend's OPEC summit was supported by others within the producer group, Angola's Finance Minister Jose Pedro de Morais said.

Saudi Arabia, the world's largest crude oil exporter and an ally of the U.S., yesterday rejected a proposal by Iran and Venezuela to debate pricing oil in currencies other than the dollar, a day before the OPEC heads of state summit in Riyadh.

"This is not the case of Saudi Arabia against the rest at all," de Morais said in an interview today. "Since the OPEC economy is profoundly linked to the dollar, any rash move could do more harm than good."

Leaders of the 12-member Organization of Petroleum Exporting Countries landed today in Riyadh, where Saudi police blocked off streets and helicopters patrolled the skies. The group will commit to ensuring stable oil supply and seek ways of reducing carbon emissions from fossil fuels, according to a draft resolution.

Oil ministers ahead of the summit rejected a U.S. call to provide more oil. after Their last production increase failed to prevent prices rallying to record levels about $98 a barrel. They will instead wait for a Dec. 5 meeting in Abu Dhabi to discuss output targets. Crude for December delivery yesterday rose $1.67 to $95.10 on the New York Mercantile Exchange.

...Accidental Broadcast

Saudi Arabia, the world's largest crude oil exporter, already rejected a proposal by Iran and Venezuela to discuss the weak dollar summit in Riyadh because it didn't want the U.S. currency to collapse.

The rejection yesterday by Saudi Foreign Minister Prince Saud Al-Faisal came during a meeting of oil and finance ministers that was accidentally broadcast to journalists.

The main protagonists in the debate were Venezuelan Energy Minister Rafael Ramirez, Iranian Foreign Minister Manouchehr Mottaki and Saud al-Faisal, each one talking in his own language. Iran's President Mahmoud Ahmadinejad also called today on the group to discuss dropping oil sales in U.S. dollars before his arrival.

"The weakness of the dollar is affecting us all," Angola's de Morais said today. "But that's a global-scale problem. It's not for an individual organization to tackle."

The dollar fell to a record low against the euro on Nov. 9 and has declined by almost 15 percent against the European currency in the past 12 months. As the dollar's decline eroded oil revenue, some OPEC members have said they will consider increasing transactions in euros.

...Diversifying Reserves

Nigeria, Africa's largest oil producer, changed its laws to allow it to diversify its foreign reserves out of dollars, Finance Minister Shamsudeen Usman said yesterday.

Nigeria joins countries in the Middle East and Asia such as the United Arab Emirates and China who are reviewing their foreign exchange reserves amid concern that the dollar's weakness may augur the end of the U.S. currency's 62-year reign as the world's main international currency for trade, financial transactions and central-bank reserves.

Even though Angola, Africa's second-biggest oil producer, agreed that the dollar issue should not be raised at the OPEC summit, the country is considering diversifying its international reserves away from the dollar.

"We are seriously considering diversifying our reserves into other currencies, predominantly the euro," de Morais said yesterday.

The African country has $10.2 billion of foreign-currency reserves, according to data compiled by Bloomberg. De Morais said around 80 percent of the reserves are in dollars.

...Cutting Carbon

OPEC plans to invest in technologies to reduce carbon dioxide emissions as a means of ensuring demand for exports in a world that has become more aware of fossil fuel's contribution to global warming.

Climate change may continue for centuries, and governments will have to spend billions of dollars annually to slow warming and adapt to its effects, a United Nations panel said.

Warming is "unequivocal" and causing Arctic ice to melt, rain to decline in Africa and the Mediterranean, and sea levels to rise, the Intergovernmental Panel on Climate Change said today.

"Slowing and reversing these threats is the defining challenge of our age," UN Secretary-General Ban Ki-moon told a news conference in Valencia, Spain, today.

OPEC has proposed a $3 billion fund for research and development of carbon emission sequestration technology, Ivo de Boer, executive secretary of the UN Framework on Climate Change, told a press conference in Riyadh yesterday.

"Since fossil fuels are going to be around for some time, we need to develop technology to reduce" carbon emissions, Saudi Arabia Oil Minister Ali al-Naimi said yesterday.

Ecuador is expected to rejoin OPEC this weekend, bringing its membership to 13 nations. The heads of state summit is the third since OPEC was founded in 1960.

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