Tuesday, May 25, 2010

Venezuela Plans To Lift Oil Output By 300,000 Barrels A Day


CARACAS (Dow Jones)--President Hugo Chavez said Sunday that Venezuela, a member of OPEC, will increase oil production by some 300,000 barrels a day starting near the end of this year.

The country will see "an important jump around the end of the year: about 300,000 barrels a day," Chavez said, according to a statement from the president's office. He didn't say from what fields the new production would come from or what companies may be involved.

Venezuela, among the top five suppliers of crude oil to the U.S., says it currently produces about 3 million barrels of crude oil a day. But estimates from OPEC and the International Energy Agency put Venezuelan oil production much lower, somewhere between 2.2 million and 2.4 million barrels a day.

Oil accounts for more than one-third of Venezuela's gross domestic product, more than half of government revenue and about nine-tenths of the country's exports.

Venezuela's economy has been in recession since last year and another contraction is expected in 2010 as it deals with electricity and water shortages, rising inflation and problems with its currency. As such, the country could use the extra income from higher oil output.

The country last year agreed to reduce output by nearly 400,000 barrels a day as part of an OPEC plan to lower production and reduce supply amid slack demand, due to the global economic downturn.

Venezuela Oil Minister Rafael Ramirez said a month ago Venezuela would maintain that OPEC agreement on output for the time being, but said the issue would be re-visited when the country deemed it necessary.

Chavez, who made his comments during his Sunday television program "Hello, President," hinted that Venezuela could get around the OPEC quota agreements because other members aren't able to produce as much as they agreed to produce.

"Yes, OPEC has quotas," Chavez said. "But there are OPEC countries that aren't able to fulfill their quotas because their production (capacity) went down."

Chavez also said there would be another big increase in oil output in 2014, presumably when several new drilling projects in the heavy-crude Orinoco region are expected to be fully online.

The government has said it expects oil output to reach 4.15 million barrels a day in 2015.

-By Dan Molinski, Dow Jones Newswires; 58-414-120-5738; dan.molinski@dowjones.com

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