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The Venezuelan Minister of Foreign Affairs, Alí Rodríguez Araque received a delegation of Gazprom, an energy and fuel complex from the Russian Federation, headed by Alexei Miller. This energy complex is formed by the Rosneft and Surgutneftgaz companies, presided by Serguei Bogdanchikov and Vladimir Bogdanov, respectively, who accompanied Miller on his visit, along with Mikhail Orlovets, the new ambassador.

This visit was a result of the discussions held between presidents Vladimir Putin, of Russia, and Hugo Chávez Frías, of Venezuela, during the Venezuelan president’s last visit to Moscow. Rodríguez pointed out the "great coincidences" between both presidents in their conversations and the "favorable atmosphere" for Gazprom and the Venezuelan state oil corporation, Pdvsa.

The Minister explained that in the case of Pdvsa, there are two five-year plans -which are updated each year-, with an investment of 40 billion U$, 27 billion of which are invested by Pdvsa, and the rest by other investors. He explained that most of the investments are in exploration and extraction.

The purpose is to increase the current production of 3.7 million barrels per day (b/d) to nearly 5 million. He also pointed out that Venezuela is highly interested in increasing its proven reservoirs of non associated gas, because despite the fact that Venezuela has great deposits, 90% of them are reservoirs of gas associated with petroleum, and specified that the greatest efforts are being focused towards offshore activities.

Rodríguez -who was also president and Secretary General of the Organization of Petroleum Exporting Countries (OPEC)- said that the bidding process of the eastern region of the country had been carried out, and that the bidding processes for new offshore blocs would soon be announced. He assured that Venezuela has the great advantage of having, right across the street, the world’s largest gas market: the United States, which has the fastest growing demand.

“It is necessary not only to produce, but also to liquefy gas, given that our goal is to increase the volume(of production), in order both to supply the internal market and to export”, said Rodríguez, who noted that since Venezuela has the world’s greatest reserves of extra heavy crude oil, and the Russian energy companies have the know-how, then both countries could establish links of mutually beneficial cooperation.

The president of Gazprom, said that the companies have common interests in the exploration and extraction of oil and gas, and that his company is willing to cooperate with technological support. He reassured Gazprom’s interest in signing an agreement memorandum with Pdvsa for the execution of gas and oil exploration, extraction, production, and commercialization projects, as well as for the construction of refineries and development of new technologies. Rodríguez promised that the signature of the document would be submitted to the consideration of the legal departments of Pdvsa and of the ministries of Foreign Affairs and Energy and Mining.

The Russian businessman assured that some ongoing situations within the Organization of Petroleum Exporting Countries (OPEC) need to be analyzed, such as the price range between 22 and 28 U$ per barrel. He said that this has shown that unfortunately, the upper level does not guarantee the regulation of the market. Therefore, he specified, this price range ought to be revised, and said that Russia is willing to cooperate at an international level in favor of further achievements of the Organization.

Rodríguez commented that “it is imperative” that there be cooperation between Russia and the OPEC. He recalled that since the year 2000, after the sharp price decrease in 1998, the OPEC gained a greater dimension when it reached a price limit among OPEC producers with the cooperation of non-OPEC producers. He explained that there had been a sudden increase in the oil demand that stimulated a speculative activity in the future market, which distorted the reality about the prices. Future sales were made with great discounts, “and that affected us”, he said.

Rodríguez explained that there had been a demand of over 80 million b/d, 30 million of which were produced by the OPEC, and the remaining 54 million by non-OPEC countries, and that there had been an excess supply of over 2 million. He also explained that a lack of sulfurization capacity, along with an increase of the supply of acid oil, was yet another factor that contributed to the price decrease, thus forcing the OPEC to reduce its production by a million b/d.

He commented that the evolution of the market would determine the decisions to be taken by the OPEC in the upcoming meeting in January. That is why relations between Venezuela and Russia are so important, and it is the task of the corresponding teams from both countries to work according to the instructions of presidents Chávez and Putin.

Published in Quantum N.45