Breakdown in Teheran talks on price of oil

Press, Volume CXI, Issue 32522, 4 February 1971, Page 11

Breakdown in Teheran talks on price of oil

(N.Z.P.A.-Reuter—Copyright) TEHERAN, February 3. The world’s 22 principal oil companies and the key producer-nations are locked in a confrontation today that could bring threatening reprisals against Western Europe’s oil lifeline.

The most crucial negotiations in a decade between the Gulf region’s six oil nations and the companies collapsed in Teheran last night; and the deadline for agreement expires today.

International repercussions seem certain to follow swiftly from the failure to reach a five-year oil-purchase agreement, with higher prices for crude petroleum and supply guarantees. The Organisation of Petroleum Exporting Countries, representing Mediterranean as well as Gulf States, South America and South-East Asia producers, is due to meet in Teheran today, with a mandate to consider retaliation. SHAH’S WARNING Ministers of the O.P.E.C. grouping of 10 oil-producing States are due to hold a morning conference, and the Shah of Iran has arranged to address an afternoon session.

Less than a fortnight ago, the Shah called his first press conference for 12 years, to issue a warning that failure to agree before the 0.P.E.C., session might mean that the Gulf States would follow the example of Venezuela, which unilaterally increased the taxrate on oil company income from 52 per cent to 60 per cent; and increased the posted price of crude oil. At that time, when asked about reports of a possible reduction in oil supplies to consuming countries by O.P.E.C. member-govern-ments, the Shah said: "It would definitely be considered if the talks fail.” “RIGID SOLUTIONS” The Shah’s Minister of Finance (Dr Jamshid Amouzegar) told a press conference last night that today’s O.P.E.C. conference would pass very strong and rigid resolutions; he did not elaborate.

Dr Amouzegar told a questioner that whether there were any chances of the talks being resumed depended on the decisions of the O.P.E.C. delegates. They represent the six Gulf States—lran, Iraq, Kuwait, Saudi Arabia, Abu Dhabi and Qatar, along

with Libya, Algeria, Venezuela and Indonesia.

O.P.E.C. countries produce 85 per cent of Western Europe’s oil requirements. People in the Western world stood to be affected vitally either by the success or failure of the Teheran talks between the Gulf States and company negotiators.

An accommodation on prices would have meant, in any case, that ordinary citizens would eventually have to pay more for petrol, central heating fuel, lubricants and the marly oil-based products in everyday use. The collapse of the talks has put the companies and the Gulf States in a confrontation that could imperil supplies vital to industry in many Western countries. Some O.P.E.C. members are believed to favour cutting off all oil supplies in a demonstration of the organisation’s power.

The Gulf States are believed to have wanted an increase in the posted price for crude oil—the price on which taxation is based—of between 25 and 32c a barrel, compared with the 20c offered by the companies. The oil companies’ offer would have meant more than SUS7OOm in extra revenue to the producers this year, rising to SUSI6OOm in 1975. Western Europe and Japan are almost entirely dependent on O.P.E.C. countries for their oil supplies. The United States, which produces two-thirds of her own oil, would be less badly hit by any possible shutdown.