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Venezuela power shortage may push oil above $100
CARACAS
Petroleumworld.com, Jan 20, 2010Venezuela’s power shortage may push oil above $100 a barrel if President Hugo Chavez diverts electricity from the biggest refining complex in the Americas, Curium Capital Advisors LLC said.
Chavez may tap a power plant at the 940,000 barrel-a-day Paraguana complex to supply electricity for public use, said Colin Fenton, chief executive officer of the Boston-based oil research firm.
“He has to decide every single day what to do with Paraguana,” Fenton said today in an interview with Bloomberg TV in New York. A shutdown there would cause a temporary price spike until U.S. refiners make up for the lost output, he said.
Most regions of Venezuela are facing blackouts for two to four hours a day to save power as the worst drought in 50 years reduces water levels in hydroelectric dams that provide 73 percent of the country’s energy.
Oil for February delivery rose 1.3 percent to $79 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Crude last topped $100 on Oct. 2, 2008.
Most units of state oil producer Petroleos de Venezuela SA generate their own power, company President Rafael Ramirez said Jan. 15. He said the units won’t be halted because of the shortages.
‘Power Collapse’
The government needs to come up with more power-saving measures “to contain energy demand and stave off a widespread power collapse,” Patrick Esteruelas, a Latin America analyst at Eurasia Group in New York, wrote today in a note to clients.
Failure to do so may cause “longer-lasting damage to Venezuela’s economy as well as undermining the government’s prospects of retaining control of congress” in the Sept. 26 elections, Esteruelas said.
Power-saving measures so far are succeeding, Igor Gavidia, president of the utility that manages the Guri dam, said today in a statement sent by the Information Ministry. Guri stores the water that provides most of the country’s electricity.
The water level declined by 12 centimeters (4.7 inches) yesterday, according to a daily report from the National Administration Center, which runs the country’s power grid.
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