Oil Diplomacy Takes New Twist as Venezuela Seeks Non-OPEC Help

Nov. 18 (Bloomberg) — Venezuela is seeking help from nations outside of OPEC to halt a collapse in global crude prices, adding a new twist to oil-market diplomacy with nine days to go until the group’s next meeting.

Nicolas Maduro, Venezuela’s president, told state television yesterday that he was coordinating with Russia to hold a meeting “very soon” with countries that aren’t members of the Organization of Petroleum Exporting Countries, as well as those within the group, to defend the price of oil.

Venezuela and other Latin American countries have been among the hardest hit by plunging prices in part because the slump has been caused by surging supplies in North America. Combined output from the U.S. and Canada rose last year to the highest since at least 1965 as producers tapped stores locked in shale-rock formations and oil sands, according to BP Plc data.

“I don’t see anyone in non-OPEC volunteering to come to the rescue,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by e-mail. “Venezuela is in a hot spot, as they have to fear the expected increase of Canadian crude oil to the U.S. Gulf.”

Venezuelan Foreign Minister Rafael Ramirez met with energy ministers from six producers this month as prices slumped, including the biggest non-OPEC oil exporter, Russia. Ramirez met Russian Energy Minister Alexander Novak in Moscow yesterday, according to the Venezuelan Foreign Ministry.

Russia Proposal

Novak told reporters in Moscow today that they discussed an initiative to halt the fall in oil prices, on which he would consult with the Russian government to develop a proposal before the next meeting with the Venezuelans on Nov. 25 in Vienna.

Ecuador and Venezuela will ask OPEC members to trim production in excess of the group’s output ceiling of 30 million barrels a day, said an official from Ecuador, who asked not to be identified citing government policy. The group produced 30.25 million barrels a day last month, data from OPEC show.

Oil analysts are split on whether OPEC will lower the output ceiling, with 10 of 20 oil analysts, traders, brokers predicting a production cut at the Nov. 27 meeting, according to a Bloomberg News survey this week.

Brent crude has lost 32 percent since reaching this year’s high in June and was trading 1 percent lower at $78.55 a barrel at 5:37 p.m. in London on the ICE Futures Europe exchange.

Vienna Meeting

While in Moscow, Ramirez also met with Igor Sechin, the chief executive officer of OAO Rosneft. The Russian company agreed to a five-year deal to buy crude and oil products from state-owned Petroleos de Venezuela SA.

Sechin will attend the Nov. 25 meeting, which was shifted from Caracas to Vienna at Venezuela’s initiative, Rosneft said yesterday via text message. The event will be two days before the OPEC summit.

Sechin, while serving as deputy prime minister, told OPEC in 2008 that his government was willing to cut output to support prices during that year’s collapse in oil prices. Russia subsequently increased production.

Other OPEC producers accelerated diplomatic visits before next week’s meeting. Saudi Arabia’s Oil Minister Ali Al-Naimi toured Latin America, while senior politicians from Iraq to Libya visited Saudi King Abdullah.

“OPEC has in the past reached out to non-OPEC member countries Mexico, Norway and Russia to help in the reduction of global oil supplies,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA, said by e-mail from London. “Sechin’s visit may simply be ‘exploratory,’ trying to assess which way the OPEC producer group may be swaying.”

–With assistance from Grant Smith in London.

To contact the reporters on this story: Jake Rudnitsky in Moscow at [e-mail]; Jose Orozco in Caracas at [e-mail] To contact the editors responsible for this story: Alaric Nightingale at [e-mail] James Herron