Venezuela gets new oil minister

CARACAS�Veteran oil expert and attorney Alvaro Silva Calderon took the oath of office Thursday as Venezuela�s new minister of energy and mines, replacing Ali Rodriguez who becomes secretary general of the Organization of Petroleum Exporting Countries on New Year�s day.

Venezuelan President Hugo Chavez said his choice of Silva Calderon demonstrates a continuation of his oil strategy aimed at strengthening OPEC and defending oil prices.

Prior to his appointment, Silva Calderon, 71, served as deputy minister responsible for the mines portfolio under Rodriguez. His long career also includes posts as legal advisor to the ministry, member of the old bicameral Venezuelan Congress, member of the House energy and mines committee, and member of the National Energy Council.

Silva Calderon told reporters he plans to continue the oil policy followed by his predecessor "which has brought excellent results for the country thus far."

"The goal is the achieve the transformation and industrialization of petroleum domestically that will give us the autonomy to sit down at international forums from a position of strength to discuss with consumers prices and market stability at levels that are satisfactory for oil producers, consumers and the economy," said Silva Calderon, one of the co-authors of Venezuela�s so-called Oil Nationalization Law of 1975.

The possibility of production cuts to keep world oil prices at a reasonable level also forms part of the continuity of the government�s oil strategy, he said.

Upon naming Silva Calderon as the new minister, President Chavez vowed to defend current oil prices and said he was prepared to travel to all OPEC member countries and discuss possible mechanisms, including oil production cuts, to prevent the price of oil from returning to 1998 levels.

The Venezuelan leader was reacting to the recent softening of world oil prices that has led to a substantial decline in his country�s oil export prices.

The average export price of Venezuela�s oil basket closed at $21.26/bbl for the week ending Dec. 22, down $4.32/bbl compared with the previous week.

"What does the developed world want? . . . Is it that they want us to continue giving away our petroleum when that is our main resource and which Venezuela is going to depend on for a long time," said Chavez.

"It�s like if we told the countries of the north to lower the prices of wheat, planes, machinery and other goods that we buy from them out of need," said the Venezuelan president.

Directing his fiery rhetoric at the industrial nations, Chavez said, "We have an external debt that has been paid 3 times already because they increase interest rates at their convenience and, therefore, we have the same right to defend our interests."

"Some say that Chavez should not say this because they are going to look at us badly. . . . I do not care if they look at me badly because my commitment is with the people, my commitment is with the poor, the unfortunate, and with a middle class that was destroyed and deprived," he added.

Chavez also said that if it becomes necessary, he would be willing to travel to OPEC member countries again in an effort to drum up joint action to defend oil prices and prevent a further decline to 1998 levels when the price of oil was below eight dollars a barrel.

"This soldier may have to travel again by plane, on foot or by camel to Tripoli or Teheran . . . to talk with OPEC leaders because under no circumstance oil prices should be allowed to go back to such low levels as 2 years ago," said Chavez.

This was the second time in less than a week that the Venezuelan president has publicly threatened to personally engineer a joint OPEC response to a continued fall in oil prices.

Last Sunday, Chavez said he would call on his OPEC colleagues to take action on the oil price slide and "if there is a need to cut production, we will do just that."

"What we want is a fair price," said Chavez, noting that producers had no intention of pushing prices up to $50/bbl, "although we could do so. What we want is a point of moderation. We want them (the consumers) to play a lean game. We call on those consumers that are playing a secret and unfair game to play clean. If not, we have our resources and leadership within OPEC and some countries outside OPEC to push oil prices to much higher levels."

Since Chavez took office almost 2 years ago, the export price of Venezuela�s oil basket has grown more than three-fold with the average for all of this year at approximately $26.40/bbl.

That increase in oil prices has led state oil corporation Petroleos de Venezuela S.A. (PDVSA) to estimate its 2001 budget of $7.1 billion based on an average export price of $20/bbl. PDVSA plans to invest approximately $5.8 billion next year, of which some $4.2 billion will go to exploration and production activities that are aimed at lifting its production capacity to 4.2 million b/d.

According to the corporation�s estimates, gross oil industry revenues in 2001 are expected to total approximately $25.53 billion with net income averaging $6.34 billion.

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