Venezuela plans long-term boost in petroleum output

[Judi Lynn]

Source: Guardian

Venezuela plans long-term boost in petroleum output
Published: Mon, 2011-08-08 21:10

CARACAS—Venezuela’s top energy official said the government is making progress on long-term plans to dramatically boost oil output and is also aiming to diversify an economy that remains heavily reliant on oil wealth. Energy Minister Rafael Ramirez said Friday night that the country intends to increase production of heavy crude in the eastern Orinoco River basin by about 15 per cent this year, and by 15 per cent to 25 per cent next year. Venezuela’s goal is to lift its oil output from about 3 million barrels a day now to about 4 million barrels a day in 2015.

“It’s a new frontier that’s opening up,” Ramirez said in an interview with The Associated Press and the British newspaper the Guardian. He said that by next year new oil fields and pipelines should be equipped to allow output to grow and that eventually more than US$100 billion in investments are planned involving both the government and private companies already doing initial work in the area. Venezuela is planning a decade of rapid oil development in the region it calls the Orinoco Oil Belt, or “Faja,” which holds vast deposits of extra-heavy crude. Studies confirming those deposits in a swath flanking the Orinoco River have allowed the country to surpass Saudi Arabia as the nation with the world’s biggest proven reserves, according to OPEC figures released last month.

Ramirez said that eventually Venezuela will need as many as 100,000 additional workers in the region and that part of the investment will go toward building infrastructure, housing and schools to support the influx of people. In the coming decade, he said, the government aims to boost output in the Orinoco from about 1.1 million barrels a day to 3.9 million barrels a day, considerably more than the entire country now produces. Venezuelan President Hugo Chavez has predicted that OPEC quotas will eventually be adjusted to reflect Venezuela’s growing reserves. But Ramirez said that issue won’t be discussed for now. As for crude prices, which fell sharply during the past week, Ramirez said that “a fair price is close to US$100 a barrel.” Crude futures ended the week at US$86.88 a barrel on the New York Mercantile Exchange, a drop of US$8.82 from the week before.

Ramirez said it’s too early to predict what steps OPEC might take in response, saying prices are being pulled down by uncertainty about the US and European economies. Ramirez is one of Chavez’s closest aides and has been his oil minister since 2002. He helped Chavez in 2003 defeat an anti-government strike that nearly paralysed the oil industry. Thousands of state managers and employees were subsequently fired. He said Friday that those conflicts were early chapters in what has been a “battle for oil sovereignty” waged by Chavez and his socialist-inspired Bolivarian Revolution movement. Ramirez’s office is filled with photos and paintings of Chavez, 19th century independence hero Simon Bolivar, Cuba’s Fidel Castro and Argentine revolutionary Ernesto “Che” Guevara.

Read more: http://www.guardian.co.tt/news/2011/08/08/venezuela-plans-long-term-boost-petroleum-output