Venezuela to Cut Oil Production by 189,000 Barrels

Venezuela plans to cut its oil production by 189,000 barrels-per-day (bpd), to conform with large OPEC production cuts agreed to last Wednesday. Carora, December 18, 2008 (venezuelanalysis.com)– Venezuela plans to cut its oil production by 189,000 barrels-per-day (bpd), to conform with large OPEC production cuts agreed to last Wednesday.

Venezuela’s Minister of Energy and Petroleum, Rafael Ramirez, announced the cut in a statement Wednesday, after the Organization of Oil Exporting Countries agreed to a 2.2 million bpd decrease. The new cuts, in addition to 2 million barrels of cuts implemented in September, are the biggest in the organization’s history.

This amounts to a 5.9 percent decrease in Venezuela’s daily output, out of its total production of 3.2 million bpd. Previously Venezuela implemented an earlier production cut totaling 129,000 bpd.

According to Bloomberg, the Venezuelan government plans to restrict output on foreign companies operating in the country, especially in projects that process so-called heavy oil, allowing Venezuela to implement the cuts while economic minimizing losses.

Russia and Azerbaijan, which do not belong to OPEC, also announced production cuts of 300,000 bpd each.

The president of the Permanent Energy Commission of the Venezuelan National Assembly, Angel Rodriguez, denied that the cuts would cost Venezuela financially, and said that an uncontrollable drop in oil prices would be the biggest threat to the nation.

In a television interview, Rodriguez explained, “Further decreases in the price of oil are not in the interest of producers or consumers, because it would stop oil development programs causing scarcity of oil in the future.”

Oil Minister Ramirez, in an interview with the newspaper El Universal, wouldn’t rule out an adjustment to the numbers used to figure the national budget, which is based on US$60 per barrel, but said first they will wait and see how the markets react to the OPEC decision.

“The prices should begin to stabilize because the crisis is mainly economic and that is causing a destruction of demand,” Ramirez said.