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Venezuela's pushing for a new OPEC cut of one million barrels - Minister Ramirez
CARACAS
Petroleumworld.com, October 31, 2008Venezuelan Minister of Energy and Petroleum Rafael Ramirez insisted that OPEC must cut at least a million barrels from its oil supply this year to maintain a reasonable price target of $70 or $80.
"We estimate that there should be a cut of at least an additional million barrels as a minimum ... in December or before December," he said at the opening of an international auction to develop Venezuela's Orinoco heavy crude oil blocks.
Ramirez said that Global economic turmoil has made a sharp dent in price levels and warned sinking prices would cause oil investment to collapse.
"There exists overproduction that has been accumulating, all this crude must be taken out of the market to avoid a buildup of inventories," he said to reporters.
Oil prices have decline as the market has focused on the negative fallout from the global financial crisis on energy demand, Ramirez told reporters.
"We estimate that at $70 per barrel the point arrives when projects now in visualization or in development begin to be abandoned in a massive way. This is not good for anybody," Ramirez said.
The financial crisis and fears of a world economic slowdown have pushed oil prices down near 18-month lows, Ramirez said.
"Right now there is a decline in demand of an estimated 900,000 barrels per day," said Ramirez, adding "OPEC should cut surplus from the market".
OPEC Secretary General Abdullah al-Badri on Tuesday said the group may hold another meeting to review policy before its scheduled conference in December if prices keep falling.
"OPEC's secretary general said there was a need for an additional meeting before December, and we're ready to do that," the minister said, adding Venezuela is preparing to cut its daily production by 129,000 barrels a day.
Ramirez insisted that there is a need to reestablish the price bands. He said Venezuela will continue to propose that OPEC set up the price bands mechanism, at $70 and $90 levels or between $80 and $100.It is absolutely necessary that we maintain the price at the reasonable levels, OPEC member countries "are prepared to do this." Ramirez said.
"We must go ahead with our development plans because with current oil prices, if economies fall short from targets and we are forced to cancel projects, in five years we will be faced with bottlenecks and production and refining capacity will not be sufficient to meet demand," Ramirez added.
On Tuesday while in Ecuador, Venezuela's President Hugo Chavez said he would support a second cut if necessary and added that Russia will probably would go along with the cut.
OPEC produces 40 percent of the world's crude oil, Russia is not a member of the organization, but was seated on the OPEC last meeting as an observer.
OPEC agreed in Vienna on Friday to cut output by 1.5 million barrels a day to 27.3 million bpd from November 1, to address the sharp decrease on prices.On Thursday, at the New York Mercantile Exchange the main contract,f WTI light sweet crude for December delivery fell 1.54 dollars to close at 65.96 dollars per barrel and In London, Brent North Sea crude for December lost 1.76 dollars to settle at 63.71 dollars.
Story by Elio Ohep, Editor of Petroleumworld
Petroleumworld 30 10 08
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