Erwin Arrieta, Venezuelan minister of energy and mines, thinks not only that North America is the natural market for Venezuelan crude, but that it could-and should-be larger.
Arrieta spoke about Venezuela's commitment to hemispheric energy markets in a Washington, D.C., address to Johns Hopkins University's Nitze School of Advanced International Studies.
Regionalization process
He said, "It looks like diversification of supply sources is triggering a regionalization process. This market regionalization has nothing to do with ideology or vogue. It is the direct outcome of economic considerations, normally related to what we can call natural markets."
Arrieta said there is a 5 million b/d deficit between consumption and production in the American continents that will grow to 7 million b/d the next 10 years.
"This is not consistent with the amount of proven reserves of 167 billion bbl, which could support a production level in balance with the requirements of the continent.
"That figure, by the way, does not include either the Orinoco belt or the tar sands of Canada.
"It seems only natural that a wide perspective at continental level should be considered, in order to appraise a proper supply/demand balance.
"However, it is imperative to realize that effective integration will come only through trade, business, and commercial activity. We have to reject any notion of intervention in the markets and thus design policies through which trade and technology flows are based on incentives and not on subsidies.
"This development of natural markets is in no way against the commercial globalization, and does not represent any kind of barriers or hurdles to the participation of countries or companies of other latitudes. It has to do with the natural rationalization of oil flows, responding to economic and commercial considerations."
Arrieta noted two thirds of Venezuela's oil exports go to the U.S. and 25% goes elsewhere in the Western Hemisphere.
"When referring to the Venezuela-U.S. relationship, the standard comment is that Venezuela is the No. 1 supplier of oil to the U.S., but this statement fails to encompass the full scope of that relationship, since the other side of the equation shows that the U.S. is the No. 1 supplier of goods, equipment, and services to the Venezuelan oil industry."
Strengthening ties
Last week the U.S.-Venezuela relationship was further strengthened when seven U.S. oil and gas firms signed contracts with state owned Petroleos de Venezuela SA in Caracas to develop large oil and gas tracts.
U.S. Energy Sec. Hazel O'Leary, who met with Arrieta during his Washington visit, said, "Venezuela's petroleum opening is a historical opportunity that will cement Venezuela's role as a major oil producer into the next century."
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