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Chavez Proposes South American Version of OPEC
The Associated Press
July 1, 2008

San Miguel de Tucuman, Argentina: Venezuelan President Hugo Chavez invited South American nations on Tuesday to create their own version of OPEC, to be called Petrosur.

Chavez told leaders of the Mercosur trade bloc that the group would be comprised of state oil and natural gas companies.

He did not specify what the organization would do. But Chavez said that if somebody asked him if Petrosur would be a South American OPEC he would say "yes, why not?" He added that one organization "would not absorb the other."

Venezuela is a founding member of OPEC, which sets oil production quotas for member countries. With 310 billion barrels of recoverable oil, Venezuela has South America's largest reserves.

Chavez said he believes international oil prices have "stabilized" at around US$140 a barrel, and said he expects it will be "very difficult" for prices to drop below US$100 a barrel.

He said Venezuela is willing to donate US$1 for every barrel exported to fund South American farmers so that the region can have food in times of emergency.

"We're not trying to convert food into fuel," he said. "But the reverse: Petroleum into food."

The socialist leader criticized what he called the United States' "crazy" initiatives to produce ethanol from corn. But he praised Brazil's biofuels industry, saying Venezuela has always supported ethanol production from sugarcane.

Referring to the Bank of the South, Chavez said the recently established monetary fund is the "first stage," but that participating nations must now retrieve their reserves from the U.S. and Europe to create a South American development fund at home.

Founding members announced last week that the Bank of the South would start up with initial capital of US$10 billion.

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