Published: Saturday 28 February 1998

Luis Giusti, president of Petroleos de Venezuela (pdvsa), the state oil company, announ-ced that the company will produce an average of 3.6 million (m) barrels per day (b/d) - 42 per cent above its Organisation of Petroleum Exporting Countries (opec) quota of 2.538m b/d.

pdvsa expects to export an average of 3.3m b/d, and total year-end production, including condensates and liquefied natural gas, would reach 3.79m b/d, Giusti said during a recent press conference held in Caracas, Venezuela.

He maintained that the current overproduction had no connection what-soever with the recent slump in the international oil prices. "Our overproduction amounts to 0.7 per cent of the total world demand; the price slump is not a Venezuelan problem," he reportedly said.

Giusti explained that the Asian crisis and a mild winter had decreased world oil demand by an estimated one million b/d and the situation had been further aggravated by Iraq's return to the oil market. The only non-cyclical factor driving the oil prices down, Giusti argued, was increased production by the opec nations following 1997's meeting in Jakarta. These amounted to 400,000 b/d.

Later, the Venezuelan energy minister, Erwin Arrieta, speculated that the current slump in the oil prices was only "temporary". However, he commented that the opec ministers were carefully analysing the market trends and an emergency meeting by these ministers could send the right signals to the world oil markets.

pdvsa is in the midst of a 10-year expansion plan, which is to boost oil production to almost 7m b/d by the year 2006. Venezuela has become the principal oil supplier to the us, overtaking Saudi Arabia. pdvsa expects the price of Venezuelan oil basket to average between us $14.20 and $14.50 during the current year, below the us $15.50 budgeted for the year.

For every dollar drop in the prices of oil, the country loses us $1.1 billion in gross revenue. Recently, the price of Venezuelan oil basket hit a historic low, then recovered slightly to us $12.85 per barrel. With more than half of its income from oil revenues, the government has not ruled out further budget cuts.

Subscribe to Daily Newsletter :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.