Venezuela plans long-term boost in oil output

August 6, 2011 - 2:30 PM

CARACAS, Venezuela (AP) — Venezuela's top energy official said the government is making progress on long-term plans to dramatically boost oil output and is also aiming to diversify an economy that remains heavily reliant on oil wealth.

Energy Minister Rafael Ramirez said Friday night that the country aims to increase production of heavy crude in the eastern Orinoco River basin by about 15 percent this year, and by 15 to 25 percent next year. Venezuela's goal is to lift its oil output from about 3 million barrels a day currently to about 4 million barrels a day in 2015.

"It's a new frontier that's opening up," Ramirez said in an interview with The Associated Press and The Guardian newspaper. He said by next year new oil fields and pipelines should be equipped to allow output to grow, and that eventually more than $100 billion in investments are planned involving both the government and a host of private companies already doing initial work in the area.

Venezuela is planning a decade of rapid oil development in the region it calls the Orinoco Oil Belt, or "Faja," which holds vast deposits of extra-heavy crude. Studies certifying those deposits in a swath flanking the Orinoco River have allowed the country to surpass Saudi Arabia as the nation with the world's biggest proven reserves, according to the latest OPEC figures released last month.

Ramirez said that eventually Venezuela will need as many as 100,000 additional workers in the region and that part of the investment will go toward building infrastructure, housing and schools to support the influx of people. In the coming decade, he said, the government aims to boost output in the Orinoco from about 1.1 million barrels a day to 3.9 million barrels a day, considerably more than the entire country currently produces.

President Hugo Chavez has predicted that OPEC quotas will eventually be adjusted to reflect Venezuela's growing reserves.

"It's an issue that we aren't going to discuss for now, as long as there is no need to discuss it," Ramirez said. "Now isn't the time to do it still, no, because we're determined to keep the price of oil stable."

He said that when such subjects are raised by OPEC eventually, Venezuela will be ready with its higher reserves and a capacity to increase output.

As for oil prices, which fell sharply during the past week, Ramirez said "a fair price is close to $100 a barrel."

Crude futures ended the week on Friday at $86.88 per barrel on the New York Mercantile Exchange, a drop of $8.82 from the week before.

As for what steps OPEC might take in response, Ramirez noted that Iran has appointed a new energy minister who would be responsible for consulting with other members.

"We must wait because it went down $4, today it climbed a little," Ramirez said. "What's affecting the oil market is uncertainty about the major economies, the European and the U.S."

He said that while no special OPEC meeting has been called about the price swing, "if the president of the conference convokes a meeting, we'll go of course."