Saudi oil minister to make rare trips to Venezuela, Mexico

By Reuters

Nov 03, 2014 09:26 PM EST

Saudi Oil Minister Ali al-Naimi is making his first visits in years to fellow exporters Venezuela and Mexico, although tumbling oil prices are not the stated purpose of the trip, according to officials and sources.

Naimi will attend a long-planned climate change meeting on Venezuela's Margarita Island that runs Tuesday to Friday, according to a Caracas-based source close to the Saudi delegation. He will be in Acapulco, Mexico, Nov. 12-14 for a major natural gas conference, two sources said.

Still, the travel plans, first reported by Reuters, come at a pivotal moment for Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC), which meets later in November to discuss how to respond to global oil prices that have tumbled 25 percent to four-year lows.

The trip quickly evoked memories of the late 1990s, when Naimi helped broker a deal with Venezuela and Mexico to curb production and revive prices that had fallen near $10 a barrel.

But the similarities are superficial. While Venezuela has already begun pressing for output curbs, the oil cartel's core Gulf members have indicated they see no need for action.

The source in Caracas declined to say whether Naimi would be discussing oil prices or meeting with Venezuela's Foreign Minister Rafael Ramirez, who represents Venezuela in OPEC, or Oil Minister Asdrubal Chavez. Both have been invited to the Margarita conference, and Ramirez is scheduled to speak there on Tuesday morning, the Foreign Ministry said.

A spokesman with Mexico's state-owned oil company Pemex [PEMX.UL] said there is no meeting scheduled with the company's CEO, Emilio Lozoya.

A Saudi-based source confirmed Naimi was traveling to Venezuela this week, adding without elaborating that he would also be in Mexico on an official visit. Mexico is not a member of OPEC. Naimi was last in Venezuela for a 2006 OPEC meeting hosted by the late president Hugo Chavez.

NOT THE 1990s

Venezuela has been pushing for an emergency OPEC meeting due to the steep fall in oil prices, but Saudi Arabia has appeared comfortable with lower prices. Saudi officials told oil market participants in New York last month to brace for an extended period of prices as low as $80, Reuters has reported.

But Naimi himself, the long-serving oil minister of the world's largest and most influential oil exporter, has not publicly spoken about prices since September, before markets entered a tailspin that pushed global benchmark Brent crude to a four-year low at $82.60 a barrel on Oct 16.

Brent traded around $85.50 on Monday in London.

The oil tumble has come at a tough time for cash-strapped Venezuela, which is already grappling with an apparent economic recession, significant debt payments and strict currency controls that have led to shortages of basic goods.

Venezuela and Ecuador are working on a joint proposal to defend oil prices that the two countries will present at the next OPEC meeting on Nov. 27, Venezuelan President Nicolas Maduro said on Friday.

Some 15 years ago, the oil ministers of Saudi Arabia, Venezuela and Mexico were key players in forging an urgent pact involving both OPEC and non-OPEC producers that helped pull crude prices up from $10 a barrel to nearer $30 a barrel.

Analysts say the kingdom now appears more focused on slowing the boom in North American shale and oil sands production than wrangling a consensus within OPEC.

"The Venezuelans are not the reason for oversupply - and, truthfully, won't be the solution to it either," said Mark Routt, Senior Staff Consultant with KBC Advanced Technologies in their Houston Office.

In Acapulco, Naimi will attend an event organized by the Mexican Association of Natural Gas and the Energy Ministry, a diplomatic source and a government source told Reuters.

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