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Tripoli Agreement 1971

In addition, different consuming countries may be encouraged to attempt to negotiate oil directly with producing countries. OPEC and the Organization of arab Petroleum Exporting Countries (OAPEC), their purely Arab branch, have lifted the temptation of this siren. And the appeal is reflected in a recent statement by a Spanish government official. He lamented that consumer countries are not represented in Tehran`s negotiations and warned that Spain would try to get more oil through formal agreements with governments in the Middle East and North Africa – and thus bypass companies – and pay with increased exports to these countries. However, despite the emotional reactions of 1970-1971, it must be acknowledged that direct negotiations between consumer and producer governments were not attractive either in terms of commercial conditions or security of supply, as evidenced by France`s experience with Algeria. Moreover, in such negotiations, there is always a risk that trade disputes will lead to political confrontations between governments that could disrupt vital oil trade twice. In this context, an OPEC meeting was held in Caracas in December 1970, which formulated a wide range of demands that the oil companies present an acceptable offer within a provocative period of time and, if not, threaten to act immediately together. The spokesmen of the producing countries publicly stated in Withal that the increase in public payments does not require an increase in consumer prices, given the increases in the price of products already in force; and it was implied that the stability of tax regimes would depend on future developments in world prices. Inevitably, very large price and tax increases had to become goals that other OPEC members not only sought, but also had to emulate. What followed was a crescendo of demands, supported by threats to hold back the output of companies that did not compensate. In December 1970, Venezuela adopted an increase in its legal tax rate from 52% to 60% and significant price increases were imposed in March 1971. [i] The most obvious effect of the last round of oil agreements is the striking increase in the revenues of the producing country, which rose from $7 billion in 1970 to about $18.5 billion in 1975. (Without the new conditions, OPEC members` oil revenues would have risen to $10 billion in 1975.) The impact on consumers will therefore be significant.

The cost of European oil imports was about $9.5 billion in 1970; By 1975, the increase in costs for Western Europe as a result of the new OPEC locations will amount to $5.5 billion; for Japan, the increase will exceed $1.5 billion (the oil import bill was around $2.5 billion last year). . . .

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