It is worth reviewing the pros and cons of each of the positions.
The argument that Venezuela should for ever remain tied to OPEC has, undoubtedly, a historical reason and a high emotional charge. Our country is bound to thank always Dr. Juan Pablo Pérez Alfonzo, former minister of Mines and Hydrocarbons, for his vision and initiative, with Abdullah Al-Tariki, former Oil minister of the Kingdom of Saudi Arabia, allowing for the creation of OPEC. It was on October 14, 1960, in Baghdad, Iraq where the countries by them represented, together with Iraq and Iran, resolved to create OPEC. Those were very difficult times for the oil producing exporting countries. The prices were vile. They did not even reach $ 1.50 per barrel and they were established by the international oil corporations which had absolute control on the markets. The exporting countries had set the objective of getting an unilateral posting of their oil's price. The tool they meant to use to reach this objective was the programming of production between the member countries thus controlling the offer and being able to establish a level of prices being more akin to their aspirations. Many years went by since this became possible. The overthrow of Libya's King Idris, in 1969, shook the oils companies' floor. Occidental Petroleum, whose President, Armand Hammer was capable of an understanding with any one; he had done it with Lenin in 1917; he reached an agreement with the leader of the Libyan revolution, colonel Mohammar Khadafi, who accepted a small increase of just a few cents, a most significant and important decision in those times. It was really in 1971 when something was done for the setting of prices, although the levels were quite different and the adjustment was just a few dollar cents per barrel. The conceived mechanism was through a fiscal price. In Venezuela it was called Export Fiscal Value (EFV) and it was a fictitious price, established by the government, preventing even partial manipulations of price with the subsidiaries of the old concession holding corporations. The companies were free to sell at any price, but for the purpose of income tax, the tax was assessed in accordance with EFV provided for each kind of crude traded internationally.

In October during the Jewish Yom Kippur festivities, the Arab countries invaded Israel and were defeated. The Arab oil exporting countries, as a retaliation for an alleged support of Israel by the United States, some European countries and Japan, established an oil embargo against these countries. The market was unbalanced and prices hiked to 10 dollars per barrel. It was folly. The OPEC countries, Venezuela among them, increased their investments and expenditure substantially. Venezuela, during 1973 -the last year of President Caldera's administration- had executed a budget of around 3,000 million dollars. During 1974 -during the first year of Carlos Andrés Pérez's presidency- the budget went up to 10,000 million dollars. The same error was committed by almost all OPEC member countries, with an alarming acute effect on the dependence on oil income and the ensuing vulnerability from the point of view of public finance. The new oil prices presented a novel and different picture, also, for OPEC. The International Energy Agency (IEA) was created and it established a series of energetic postulates and objectives for the member countries, such as:

1. The establishment of energy conservation policies to make its use more efficient and less expensive. This had as consequence a radical transformation in the industrial sector, in automotive transportation and, generally, in the services area. Industries are becoming more efficient every days, transportation vehicles are becoming lighter and they consume less fuel per mile.
2. To substitute oil, particularly that coming from OPEC countries, with other energy sources such as coal and nuclear energy -the latter having declined because of the risks and the environmental groups' pressure.
3. To advance exploration campaigns, under the incentive of the new price levels, trying to incorporate new countries to the international oil market. The results of this policy are evident. New oil countries have appeared in the international scenario: Egypt, Malaysia, Angola, Brunei, Colombia, etc. There was oil in all of them but the low prices did not stimulate the assumption of exploration risks. When the market process went up the risk was acceptable and they were successful.
4. To develop the expense oil that had already been found, but that low prices made its exploitation unworthy in economic terms. Norway and England are part of this category; their Northern Sea production has gone from 3,000 barrels a day in 1973 to more than 5 million barrels a day now.

When so quickly increasing prices in 1973-74, the consumer countries' economic growth was hindered. The amount of the oil went up multiplied by four. This slowed down economic growth, oil demand dropped and oil lost competitiveness against other sources of energy, particularly coal and nuclear energy.

For some years, during 1975 and 1978, oil prices remained stable in absolute terms but were lowered in real values. The price situation tended to worsen for OPEC countries. Their public finance levels of expenditure were too high. Some had become heavily and expensively indebted, as it was the case with Venezuela.

Early in 1979, the Shah of Iran was overthrown. The triumphing Islamic Revolution of Ayatollah Khomeini sharply reduced Iran's oil production levels and took out of the market more than three million barrels a day. Prices went up sharply and, in less than a year, the marker crude, Arabian Light, went from $ 12.70 per barrel to more than $ 26 per barrel. This new increase brought similar consequence to the international oil market as those of 1973. There was increased energy conservation; substitution of oil by coal and nuclear energy was stimulated and new countries appeared in the oil firmament, with more ferocious competence than in former years and the world's economy was affected with a diminution of oil consumption.

During 1979 the OPEC countries' oil production was situated at 31 million barrels, while that of the non OPEC countries was ate the same level. Faithful to their initial postulates of defending the oil prices, the [member] countries began to lower their production, first individually and then in a concerted manner, thus defending the price structure. As Minister of Energy and Mines during president Luis Herrera Campins' administration, I participated in the development of this strategy. OPEC production was lowered gradually as follows

YEAR	OPEC PRODUCTION (MM B/D)
1979	31,0
1980	27,0
1981	22,5
1982	18,0
1983	17,0
1984	16,0
1985	15,5

I believe that the application of the price defense postulate was an error. What we should have applied was the concept of income defense, which is the combination of prices and the volume of exports. To defend those of us who were the representing Ministers at OPEC, one must say that we had all been brought up with the concept of the defense of oil prices. This does not mean that the postulate was not valid in 1960. During those times it was valid but it was not so in 1979. It was then a political concept and price was a political concept. We should then have adopted a competitive price against oil coming from non OPEC countries and against other sources of energy. The consequences of having applied the production reduction by establishing a ceiling for all OPEC countries and individual quotas by country, gave room in the market to non OPEC producers for an expansion of their own production. Anything not produced by OPEC countries was taken by non OPEC ones constantly increasing their own levels.

The crisis appeared in all its magnitude in 1986. That year, OPEC was producing 15,5 million barrels a day. Of them, consumption in its member countries' domestic market took some 3 million barrels a day, leaving roughly 12 million barrels a day for export. A volume of this size in a 48 million barrels a day market, as 1986 was, did not allow OPEC to be a determining and decisive source in the international oil market being able to defend the structure of prices. What had been its strength became its weakness, Prices tumbled under 1o dollars per barrel. It was a debacle. A furious competence rose between OPEC and NON-OPEC. At times it was a war of all against all. Income dropped brutally, All the OPEC countries had obtained income of more than 280 billion dollars in 1980. In 1986, income for all of them was 78 billion dollars. Venezuela with an oil income in 1980 close to 20 billion dollars, saw it shrink to 7.5 billion in 1986. The effect on the OPEC countries' finance was so great that the strategy had to be sharply changed. OPEC decided to recover the market share it had lost and to participate in its growth. In order to meet this objective, the strategy was to place increasing volumes in the market, at competitive prices, but maintaining certain discipline by establishing production ceilings and individual quotas by countries gradually adjustable upwards.

Until now the strategy has provided good results. OPEC has increased its production from 15.5 million barrels a day in 1986 to around 25 million barrels a day in 1996. To reach this, OPEC oil has been forced to remain competitive with the West Texas Intermediate, with the European market's Brent and with the Far East's Dubai. Even thus, prices have improved. This would not have been possible without OPEC having a price policy, even if the demand had improved, as it did effectively.

The market has been growing somewhere between 1-2% annually for the recent years. OPEC has decided, with success, to participate in this growth in an orderly manner. Some may think that there are countries in the Organization violating the production quotas and this is true. This has always occurred ever since the beginning of the quota system in the eighties. But even thus, violations, in relative terms, are negligible and have not dislocated the market. This is a fundamental point for the benefit of OPEC. If the Organization did not exist and each country felt free to produce to maximum capacity, there is no doubt that the prices would have collapsed affecting all oil producers. OPEC acts as a regulating agent for the market

On another hand, one of the Organization's achievements has been the continuous development of a strategy that has allowed fro increased production at profitable prices for its oil. Our country's interests insert themselves conveniently in this strategy

Under the best forecasts, the market should increase at around 2% p.a. for the coming years. This means that the world demand should be placed somewhere between 75-85 million barrel a day by the middle of the next decade. If this proves to be true, OPEC will be able to participate with some 34-45 million barrels a day of that volume.

If the quota system were to be maintained until then, and if Venezuela should keep its current ratio of roughly 10% of the ceiling, our country's level would be around 3.2-4.5 million barrels a day which would give sufficient room to accommodate the anticipated production with all the oil policy opening's fronts, that is to say the reactivating of inactive fields, the strategic associations of the Orinoco Oil Belt and the volumes coming from the recently negotiated areas under the profit sharing scheme.

There is another aspect that one should bear in mind. It is the very same situation of the member countries' reserve levels. In this sense and according to the size of the oil reserves, there are two groups with entirely different strategic interests on the long term.

The first group, integrated by Saudi Arabia, with 250 billion barrels; Iran, Iraq, Kuwait and the United Arab Emirates, with reserves of around 90 billion barrel each; and Venezuela with 66 billion barrels of conventional oil plus more than 270 billion of recoverable extra-heavy oil from the Orinoco Oil Belt.

The second group would be integrated by the remaining OPEC member countries, although between them the reserve levels are quite dissimilar, with all being under 20 billion barrels.

There should be coincidence in the first group as to a long term strategy. It is convenient for them all to extend to a maximum the horizon of their oil use as an energy source, fundamentally in view of the substantial reserves they have. Consequently, the strategy should be based on the guarantee and reliability of supply, the placement of increasing volumes of oil in the market and profitable yet competitive prices against other producers and alternate sources of energy. Unfortunately what seems so simple, is practically not so. Different political interests and instances of conflict between the Gulf area countries lead to the existence of circumstances with immediate nature bringing a real obstacle to an understanding that could turn out being really profitable for all.

Even recognizing these circumstances, inconvenient as they may seem to our interests, one should have to review the benefits we would have from forsaking the Organization at this time. The first thing one should ask is what kind of inconveniences for the development of our plans are brought to us as OPEC members. Venezuela has been producing at important levels without OPEC having been a hurdle for it. If demand keeps growing, our country could keep increasing its production coming from its expansion plans. If the production potential were to reach important levels and the OPEC policies were to prevent us to produce according to our interests, we would have to analyze, then, if it is convenient for us to remain or not as a member of the Organization. In all events, it seems that it is not good for our interests, nor is it prudent, to debate these issues permanently, or recurrently, as it has been the case in recent years. Me must not forget that under our system's democratic nature, Venezuela is the sole OPEC country where these issues are openly discussed, This is not bad by itself, but we must understand and accept that there are reasons of State convenience that make it inadvisable to discuss issues, such as production levels, in an open way when the circumstance does not allow it.

We are today convinced that a withdrawal of Venezuela from OPEC would not be convenient to our interests, Our country's case is not that of a marginal producer with little importance in the international markets. This is the country with the most important oil reserves in the Western hemisphere and maybe the greatest outside the Persian Gulf area. The withdrawal of Venezuela would be a serious blow for OPEC, for oil countries in general and for our own country. Disorder would appear and anarchy in the markets; prices undoubtedly would collapse seriously affecting most needed income in these times of scarcity.

We have learned how to live, within OPEC. with countries having a history, customs, religion and political interests different from our own. The balance of this coexistence has been positive and convenient to our interests.

The issue is then one of being practical and rational and of placing on the balance the pros and cons for Venezuela to be a member of OPEC. In other words, and in sum, a cost/benefit analysis is required. If the benefits are greater than the inconveniences then we must remain in OPEC. If ever the inconveniences are greater, then we should seriously think of abandoning the Organization. We must wait and see in order to decide.