A few weeks ago, we wondered if oil diplomacy was driving Venezuelan President Hugo Chavez over the edge. Back then, we noted that Chavez compared himself with Jesus, telling fellow leaders in the Caribbean that his country would supply them with oil at preferential rates (OGJ, Aug. 20, 2007, p. 34).
Chavez’s boasting continues, with more recent claims that his government is launching the socialist gas revolution. According to Chavez, Venezuela possesses 80% of South America’s gas reserves and 30% of the gas reserves in the Americas.
Recently Chavez said his administration would invest $18 billion to expand gas production to 11 bcfd over the next 5 years from 7 bcfd (OGJ Online, Sept. 19, 2007). Touting his country’s assets, Chavez said Venezuela has proved gas reserves of 150 tcf onshore and 30 tcf offshore.
Production increases
Meanwhile, the volatile Venezuelan leader said his government also plans to increase the country’s oil production to 5 million b/d in 2012 from its current 3.2 million b/d.
Oddly enough, he never seems to have mentioned any agreement from the Organization of Petroleum Exporting Countries, which Venezuela helped to found, about that production increase. And do you know something else? It seems that OPEC disagrees with the amount of oil Venezuela claims to produce.
Indeed, OPEC has openly-and very publicly-cut Venezuela’s oil production ceiling allocation far below the output level claimed by the South American country and its loquacious leader.
On Sept. 21 OPEC, according to the latest figures on its web site, reduced Venezuela’s ceiling by a whopping 24% to 2.47 million b/d-a lot lower than the 3.22 million b/d allocation the country had before the most recent OPEC meeting in early September. That added powerful weight to analysts, such the International Energy Agency, that have long said that Venezuela’s production figure of 3 million-plus b/d of oil is inflated.
Public embarrassment
Venezuela has not taken the OPEC numbers lightly. Earlier this month, Venezuelan Oil Ministry officials met Fuad Al-Zayer, who leads OPEC’s data services department, to get the figures changed. The visit made no difference. OPEC very clearly stood fast to its numbers.
A spokeswomen for Venezuela’s oil ministry declined to comment on the ceiling cut other than to say that it was an issue only the oil minister could comment on himself.
No wonder she would want to distance herself from such a responsibility. How embarrassing since the organization which Venezuela helped to found is obviously distancing itself from the inflated claims of the country’s government.
But Chavez just moves on. Last week, he insisted that Venezuela, the fourth largest supplier of oil to the US, will expand its petrochemicals industry during the next 5 years, lifting revenues to $100 billion/year.
“Venezuela is going to be a global petrochemicals power,” Chavez said.
By gosh, do this man’s whoppers never end?