Chavez Says Venezuela and OPEC Ready to Cut Oil Output Further

Venezuela is prepared to make further oil production cuts with the aim of ensuring a fair price per barrel, President Hugo Chavez said. "We'll make the reductions that have to be made and I'm telling that to the world," Chavez said, adding that he was certain that all of Venezuela's partners in the Organization of Petroleum Exporting Countries, or OPEC, "think the same."

"If it's necessary to cut another two million barrels of oil we'll do it (within OPEC) to preserve the price per barrel," the president of Venezuela, the world's fifth-leading crude exporter, said. Chavez made his remarks on Tuesday during his annual address to the National Assembly, which all free-to-air television and radio stations were required to broadcast.

The Venezuelan leader read a brief report on the 2008 performance of state-owned oil giant PDVSA and said that during that period the country's crude production rose by "137,000 barrels per day" relative to 2007. "But we finished December with (production of) 3,187,000 barrels per day" after an initial cut agreed to by OPEC members in September, "and in January the second reduction (went into effect)," Chavez said. PDVSA said Jan. 7 that it reduced crude exports to the United States - its No. 1 customer - by 166,000 barrels per day as part of its move to comply with output quotas established at OPEC's December meeting.
This reduction of 189,000 bpd, effective starting Jan. 1, 2009, was in addition to production cuts of 46,000 and 129,000 bpd implemented by PDVSA to comply with OPEC quota reductions agreed at meetings in September and October of 2008," the Energy Ministry said. The total reduction in Venezuelan production is "364,000 barrels of crude per day," which puts the country's total output "at 3,011,000 barrels per day," PDVSA said in a statement.

The cuts affect joint venture projects between PDVSA and foreign oil firms BP Plc, Chevron, China National Petroleum Corp., Total, Statoil, Shell, Petrobras, Repsol YPF and Oil and Natural Gas Corporation. OPEC members are slashing production in response to a plunge in oil prices amid the global economic crisis.

The current price for Venezuela's basket of mostly heavy crude currently is less than $30 per barrel, down nearly 70 percent since last summer. Revenues from oil exports account for the lion's share of Venezuela's hard-currency revenues and underwrite around half of government spending.