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GAO : Loss of Venezuelan exports could increase oil prices $13/barrel
By Elio Ohep
Petroleumworld
CARACAS
Petroleumworld.com 06 16 06
The US General Accountability Office or GAO said on its latest draft report on Venezuela's oil production that a six-month loss of Venezuelan exports to the US market could cause a $9-13/barrel increase in crude oil prices and lead to a reduction of up to $23 billion in US Gross Domestic Product, Platts reported on Thursday.
"A Venezuelan oil embargo against the US would increase consumer prices
for petroleum products in the short term because US oil refiners would face
higher costs getting replacement supplies," the GAO said
GAO said that US refiners designed to handle Venezuelan heavy sour crude would
lose some of their effective capacity if they have to replace their supply with lighter crude.
A stop of Venezuela's crude imports for its five wholly owned Citgo refineries in the US would also increase gasoline and other product prices until those refineries
find new sources and where brought online, GAO added.
The GAO said that Venezuela's will be "seriously hurt" if they stop oil exports to the U.S. the country's economy is heavily oil-dependent.
Venezuela is the world's eighth largest oil exporter, and supplies the U.S. with
1.5 million b/d, or 11% of current crude oil and petroleum product imports.
In the event of disruption by Venezuela, the US could release oil from the US Strategic Petroleum Reserve and attempt to get other oil producing nations to increase their production, GAO said.
"While these options can mitigate short-term oil disruptions, long-term
reductions in Venezuela's oil production and exports are a concern for US
energy security, especially in light of the current tight supply and demand
conditions in the world oil market,"
GAO also noted that Venezuelan oil production, exports of both crude and refined
products to the US have been "relatively stable" except during December of 2001 labor strike that crippled the oil industry and completely halted output for nearly two month.
The agency said that there are "uncertainties about the accuracy of available production data" from Venezuela, and data indicated a "significant decline" in production, with net foreign direct investment declining from $3.5 billion in 2001 to almost zero in 2002 before recovering to about $1.9 billion in 2004, even do the Venezuelan government numbers show a recovery on its oil production up to 3,3 millions of barrels per day.
GAO said that Venezuela's government announced plans in 2005 to expand its oil
production by 2012 to 5.8 million b/d, but even do it is technically feasible, is probably not realistic since Venezuela's has yet to get the investment needed for such levels of production and the country has been unable to maintain its level
of oil production in recent years.
GAO is the name of the Government Accountability Office, is an independent, nonpartisan agency that works for Congress. GAO is often called the "congressional watchdog" because it investigates how the federal government spends taxpayer dollars.
- Elio Ohep, editor@petroleumworld.com, 58 412 996 3730, Caracas.
Petroleumworld News 16 06 06
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