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Analysis: Venezuela cuts more oil output
Miami (UPI) Feb 10, 2009 Venezuela made good on its promise to reduce oil exports, canceling several shipments to the United States, in order to comply with reduced OPEC production requirements and bolster its own fortunes by helping raise the price of oil worldwide. Four shipments bound for the U.S.-based company NuStar Energy LP, totaling 1.2 million barrels, were canceled, according to company officials. Two shipments were scheduled for this month and the remaining deliveries for March. While NuStar contends the company would not be adversely affected by Venezuela's decision to cut its exports, the company joins a growing list of U.S. energy firms not receiving Venezuelan crude. As part of its own efforts to stem losses caused by falling oil prices, the Venezuelan state-owned energy company PDVSA last month said it was discontinuing shipments to two southern U.S. refineries, Sweeney and Chalmette. The Venezuelan economy has been particularly troubled by the fall of oil prices from a high last year of around $150 a barrel. The steep drop-off in the price of oil -- almost 60 percent less than it was at its all-time high in July 2008 -- forced significant cost-cutting measures for the Venezuelan government and the wide-sweeping social programs favored by leftist President Hugo Chavez. Venezuela's budget for 2009 was created with a $60-per-barrel price tag in mind. But with prices hovering in the $30 to $40 range, the Chavez administration has admitted that its social efforts, both at home and abroad, would surely suffer. Despite the downturn caused by falling oil prices and a worldwide economic slowdown, Chavez recently expressed confidence in both PDVSA and the Venezuelan economy to weather difficult times. "If you ask me what measures need to be taken, I would say we've been taking them," said the Venezuelan leader, referring to PDVSA's supposed preparedness for global recession and falling oil output. The president maintains that the reduced exports to the United States are part and parcel of his plan to continue reducing exports to the United States while increasing those to oil-hungry countries like China. In 2007 Venezuela exported 1.28 million barrels per day of oil and other petroleum products to the United States from January through April. During the same period this year, export levels dropped to 1.13 million bpd, according to a recent report by the U.S. Energy Information Administration. His confidence aside, Chavez and PDVSA, however, did appear to have been caught off guard by the severity of the OPEC cuts when it was announced last month that a favorite social program of the Chavez administration was being shut down: free heating oil for hundreds of thousands of poorer Americans. The program was briefly cut, then quickly was restarted just two days after the announcement, following the international attention the project's cancellation placed on the plight of PDVSA and Venezuela's economy. The discounted oil program has riled anti-Chavez Washington. U.S. critics contend the program was more about embarrassing the United States than charity, part of the ongoing tensions between Venezuela and its largest oil customer, the United States. While Chavez maintains his country will "endure difficult times in years to come, no doubt," it seems unlikely that PDVSA will be able to endure without some much-needed foreign investment. Over the past few years, under Chavez's orders, PDVSA has been renegotiating contracts with foreign oil companies to give Venezuela a greater controlling share of projects. Several foreign companies chose to pull up stakes rather than endure a contract renegotiation. But with oil prices dropping and PDVSA unable to meet even reduced production needs, the Venezuelan government has been forced once again to begin courting foreign oil companies in hopes of jump-starting production in the short term and perhaps provide PDVSA with much-needed capital for infrastructure improvements long put off in favor of Chavez's social spending. "If re-engaging with foreign oil companies is necessary to his political survival, then Chavez will do it," Roger Tissot, an authority on Venezuela's oil industry at Brazilian consulting company Gas Energy, told The New York Times in a recent interview. Related Links Powering The World in the 21st Century at Energy-Daily.com
Analysis: Iraqi oil meetings set the stage
Washington DC (UPI) Feb 10, 2009This week's meeting of the Iraqi Oil Ministry with international oil companies in Istanbul begins a three-month series of gatherings, organized by the government or government workers, aimed at clearing through the turmoil of revitalizing Iraq's oil and gas sector. |
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