PDVSA feels free from OPEC output ceilings

Feb 18, 1997 01:00 AM

Feb. 6, 1997 A top PDVSA executive said that OPEC production ceilings were a thing of the past and what was important was oil production growth.
Outlining Venezuela's ambitious production targets for the next ten years, PDVSA corporate planning co-ordinator David Escojido said OPEC's experience of defending prices in the 1970's proved a mistake and backed a policy of defending market share. "Venezuela thinks ceilings are in the past, we should plan in another manner... It is completely wrong to defend prices," he said, noting that OPEC lost market share when it followed a price-policy in the 1970s.
Venezuela is usually seen by analysts and other OPEC members as OPEC's biggest quota violator. In January, a OPEC production survey found that Venezuela produced 3.17 million barrels per day (bpd) of crude oil, against an OPEC quota of 2.36 million. Escojido detailed Venezuela's plans to increase production capacity to 3.71 million bpd in 1997 and 6.2 million by 2006. Private capital would participate in twoof the three million bpd planned increase, from just 130,000 bpd currently, Escojido said. By 2006, PDVSA expects 665,000 bpd from the Orinoco Belt, which currently produces nothing. Five joint ventures have so far been signed between PDVSA and foreign oil companies to exploit the Orinoco Belt, worth $ 12-13 billion in investments over the next three to five years. Third party participation in virgin oil provinces would contribute 540,000 bpd while PDVSA's own activities in new areas would account for 555,000 bpd, according to the ten-year plan. Operating agreements with private companies would produce 585,000 bpd by 2006.
PDVSA's own production of light/medium crude from existing areas was forecast to reach 2.496 mm bpd while and heavy/extra-heavy output was expected to reach 1.359 mm. The plan did not predict any significant change in the price of crude, using an OPEC basket price forecast of $15-16 per barrel until 2006. Escojido said two percent growth in world oil demand was strong enough to absorb all of Venezuela's planned increase."The position of Venezuela in OPEC, compared to the rest of OPEC, is we said we don't have to close in production. Nobody has to close in production because the way we are seeing demand growth... there is no need to close anything. They said we were crazy and in the end we were right," he said.

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