Venezuela, Mexico, and Saudi Arabia are protesting allegations levied against them and Iraq that the oil exporters dumped cheap crude oil supplies on the U.S. market, ostensibly resulting in some U.S. oil producers being driven out of business.
The protests came in response to petitions that Save Domestic Oil Inc. (SDO) has filed with the U.S. Department of Commerce and the International Trade Commission.
Mexican Energy Minister Luis Tellez said Mexico, Venezuela, and Saudi Arabia would join together to fight the accusations, asserted by SDO on behalf of U.S. independent producers (OGJ, May 17, 1999, p. 35). The three countries were the main architects of multilateral oil production cutback agreements in 1998 and in 1999 that have been the key to reviving oil prices while global oversupply and sagging demand threatened to keep oil prices in the cellar indefinitely.
What`s alleged
SDO, a group representing independent U.S. oil producers, has asked Commerce to investigate alleged dumping and ITC to impose antidumping tariffs against oil imports from the four countries accused. The petitions claim those nations are selling oil at less than fair value, due to government subsidies, thus injuring U.S. producers.
The SDO petitions are supported by the Independent Petroleum Association of America and the California Independent Petroleum Association, among other groups.
Harold Hamm, SDO chairman, said, "U.S. producers believe in free-but fair-trade. We are the fiercest competitors on earth, company to company, but there is not any company anywhere that can compete against an oil company that is nationally owned and supported."
He said U.S. consumers would not be hurt if ITC grants tariffs: "A $1/bbl increase in crude oil prices at the wellhead results in only 2.5¢/gal total adjustment in gasoline."
Venezuelan reaction
Roberto Mandini, CEO of Venezuelan national oil company Petroleos de Venezuela SA, said, "The allegations are simply not true. Pdvsa receives no subsidies from the government; moreover, we have never dumped....
"In recent years," said Mandini, "Pdvsa has made very significant investments in the U.S. oil sector, and U.S. oil companies have invested as well in Venezuela...Pushing down oil prices would be suicidal for Venezuela. Our nation depends on oil revenues for a major portion of its national income.
Citgo Petroleum Corp., the U.S. subsidiary of Pdvsa, also opposes the antidumping petitions.
W.A. DeVore, senior vice-president of supply and marketing for Citgo, accused independent producers supporting the SDO petition of using Venezuela as a scapegoat: "(They) are simply ignoring the fact that the drop in prices last year resulted from a worldwide reduction in crude oil demand, brought about by unseasonably warm weather, the financial crisis in Asia, and increased sales of Russian oil and not by any dumping on the part of Venezuela," said DeVore.
Mandini shares DeVore`s viewpoint. "Pdvsa has more things in common than differences with independent and small oil producers in the U.S.," he said. "We fully understand their plight; indeed, we share it...We should not be made a scapegoat for financial woes that we share with our U.S. counterparts and other world oil producers....
"Far from engaging in dumping," added Mandini, "Pdvsa responded rationally to last year`s worldwide decline in demand by reducing our crude oil output."
