Oil Squeeze

Haggling is a way of life in the Middle East, but the oil-rich nations there have made it a disciplined science. Historically factious, they have united in a new and powerful outfit that is out to break once and for all the tradi tional fifty-fifty split of oil profits between governments and companies. The Organization of Petroleum Exporting Countries, as the group calls itself, last month demanded a 58% share of the profits for their governments in negotiations with the eight major oil companies operating in the Middle East. Since the new split would cost oil companies $270 million a year, they countered with a compromise proposal, which OPEC last week rejected as "completely unacceptable."

Founded in 1960, OPEC now has eight members--Indonesia, Iran, Iraq, Kuwait, Libya, Qatar, Saudi Arabia and Venezuela--and controls 90% of the world's oil exports. "Oil is the only resource that God gave us," says OPEC's secretary-general, Fuad Rouhani, 56. "We are not so much underdeveloped nations as we are underpaid nations." Having rebuffed the oil industry's big eight (five of which are U.S. companies), OPEC plans a meeting in the Saudi Arabia capital of Riyadh later this month to decide what is next.

Though nervous, few oilmen expect OPEC to recommend nationalization to member governments, though even a hint of that is an effective weapon in the haggling process. More likely, OPEC will simply try to squeeze more money out of the oil companies by imposing taxes on tanker loadings and pipeline shipments.

This file is automatically generated by a robot program, so reader's discretion is required.