Oct. 22 (Bloomberg) -- Organization of Petroleum Exporting Countries governors gather in Vienna to select a new secretary-general for the first time in six years, with four countries vying for the position.
The governors met for more than six hours today and will reconvene tomorrow at OPEC’s headquarters to interview nominees from Iran and Iraq as well as the group’s biggest and smallest exporters, Saudi Arabia and Ecuador. The governors will recommend a successor to Libya’s Abdalla el-Badri, who completes a second, three-year term at the end of this year. A final decision will be taken by ministers in December.
“The secretary-general does play an important role, with implications beyond the oil markets,” Ehsan Ul-Haq, senior market consultant at KBC Energy Economics, a unit of KBC Advanced Technology Plc, said by phone from Walton-on-Thames, England on Oct. 19. “He has to represent all opinions despite differences between member countries.”
The producer group controlling 40 percent of global oil supply has boosted output in the past two years as fighting in Libya and sanctions on Iran disrupted exports from those two members, keeping prices volatile. The secretary-general can coordinate emergency meetings when needed and the post holds political gravitas within OPEC even though policy decisions are made by oil ministers from the 12 member states. OPEC supply quotas will be discussed by ministers on Dec. 12, and are not for debate at the governors’ two-day meeting this week.
Founded in 1960, OPEC has previously had one secretary-general from each of the four nominee countries; Ecuador in 1979-1981 and the others in the 1960s.
This time, Saudi Arabia nominated its former OPEC governor, Majid al-Moneef, while Iran selected Gholamhossein Nozari, a former oil minister. Iraq, OPEC’s second-biggest producer, is backing Thamir Ghadhban, another former oil minister. Ecuador, the organization’s smallest producer, nominated Wilson Pastor, who is that country’s current oil minister.
Ministers will make a final decision on any selection at the full OPEC meeting on Dec. 12 at the group’s headquarters in the Austrian capital.
The competition to fill the OPEC secretariat’s top job comes amid rising tension between Saudi Arabia and Iran.
Saudi Arabia’s Sunni monarchy has accused Shiite-led Iran of interfering in the affairs of Arab countries in the Persian Gulf, a charge denied by Iran who in turn accuses Sunni rulers in Bahrain and Saudi Arabia of discriminating against Shiites. Saudi Arabia increased output this year to replace volumes lost from Iran, whose exports have been curbed by U.S. and European Union sanctions, relegating it from the rank of OPEC’s second-largest producer.
Suleiman al-Herbish, who was nominated for the secretary-general position by Saudi Arabia in 1999, is backing the kingdom’s nominee. Al-Moneef wrote his doctorate thesis on the impact of oil prices on producing nations and is respected in the energy industry, al-Herbish said.
“Other members should be delighted that the kingdom is putting forward someone with so much knowledge and experience,” al-Herbish, now the director-general of the OPEC Fund for International Development, said in a phone interview from Vienna today. “Saudi Arabia is balancing the market, it is the main exporter, it is putting its weight behind the organization, playing the major role in charting the future of OPEC, and it hasn’t held the secretary-general position for a long time.”
The OPEC Statute defines the requirements for a secretary-general, who must be at least 35 years old with a degree from a recognized university, and have at least 10 years experience in the oil industry. The four candidates were born between 1945 and 1951, meaning they’re all in their sixties.
“It may be difficult to elect someone from Iran because of the embargo,” Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna, said by phone Oct. 19. “It may also be difficult to get agreement about a Saudi Arabian person because the kingdom may push for an oil price of around $100 a barrel while the other members would prefer higher prices.”
For those reasons, the Ecuadorean or Iraqi candidates may be “more convenient,” Loacker said.
Still, Ecuador’s candidate, Pastor, told reporters in Quito on Oct. 19 that he had “few possibilities” of securing the job because his country is a small producer and doesn’t have the same weight as other member nations.
Iraq as Compromise
As Saudi Arabia and Iran are unlikely to support each other’s candidate, Ghadhban of Iraq may be good compromise, according to the Centre for Global Energy Studies.
“Ghadhban may suit Saudi and Iran,” Leo Drollas, chief economist at the London-based CGES, said by phone today. “Iran politically, because of the Shia connection, and Saudi because Iraq’s capacity is rising and having an Iraqi as OPEC chief may make it politically more difficult for Iraq to go its own way if the group has to restrain output.”
El-Badri’s selection as secretary-general in 2007 over candidates from Iran and Kuwait ended a three-year deadlock over a permanent appointment for the post. A former chairman of Libya’s National Oil Co., el-Badri’s tenure at OPEC has now outlived the deposed Libyan government of Muammar Qaddafi that nominated him.
Each member state appoints a governor and a national representative to OPEC. The governor sits on the board, helping to manage the organization and its budget, while the representative’s duties include analyzing the oil market. Each country’s oil minister usually leads their delegation at OPEC conferences, which occur at least twice a year, when the group’s supply targets and any other policies are decided.
OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
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