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Ecuador may rejoin oil cartel

February 12, 2007|From Reuters

QUITO, ECUADOR — Tiny oil producer Ecuador is considering rejoining the Organization of the Petroleum Exporting Countries in a political move even though the cartel's quota system may stymie the poor South American nation's own industry.

With its daily output of 530,000 barrels a day, only about 5% that of OPEC heavyweight Saudi Arabia, Ecuador would have little sway in the group, which supplies more than 30% of the world's oil.

Joining the cartel is an effort by President Rafael Correa to fortify his credentials as a leftist in the mold of his Venezuelan ally, Hugo Chavez, analysts said.

Membership would "give Correa more credibility as a hard negotiator with foreign investors by telling them, 'I'm a real nationalist,' " said David Mares of UC San Diego.

Ecuadorean officials say the country would benefit from technological and economic assistance from the group's bigger players, prospects that also have enticed recently approved member Angola and OPEC hopeful Sudan.

But the cartel's critics charge that the quota system derails its members' investment plans by calling on them to cut output when prices fall, leaving industry plans in disarray.

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