Chávez seeks to peg oil at $50 a barrel

[cal04]

Price could see Venezuela producing for 200 years
· Country's reserves may exceed Saudi Arabia's

Venezuelan president Hugo Chávez is poised to launch a bid to transform the global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel. A long-term agreement at that price could allow Venezuela to count its huge deposits of heavy crude as part of its official reserves, which Caracas says would give it more oil than Saudi Arabia. "We have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."

The price proposed by Mr Chávez is about $15 a barrel below the current global level but a credible long-term agreement at about $50 a barrel could have huge implications for Venezuela's standing in the international oil community. According to US sources, Venezuela holds 90% of the world's extra heavy crude oil - deposits which have to be turned into synthetic light crude before they can be refined and which only become economic to operate with the oil price at about $40 a barrel. Newsnight cites a report from the US Energy Information Administrator, Guy Caruso, suggesting Venezuela could have more than a trillion barrels of reserves.

A $50-a-barrel lock-in would open the way for Venezuela, already the world's fifth-largest oil exporter, to demand a huge increase in its official oil reserves - allowing it to demand a big increase in its production allowance
within Opec. Venezuela's oil minister Raphael Ramirez told Newsnight in a separate interview that his country plans to ask Opec to formally recognise the uprating of its reserves to 312bn barrels (compared to Saudi Arabia's 262bn) when Mr Chávez hosts a gathering of Opec delegates in Caracas next month.

Venezuela's ambitious strategy to boost its standing in the global pecking order of oil producers by increasing the extent of its officially recognised reserves is likely to face opposition. Some countries will oppose the idea of a fixed price for the global oil market at well below existing levels. Others are unlikely to be happy with any diminution of their influence over world oil prices in favour of Venezuela. Caracas's hopes for an increase in its standing would be a far cry from the days when Mr Chávez came to power after years of quota-busting during which Venezuela helped to keep oil prices down. "Seven years ago Venezuela was a US oil colony," said Mr Chávez.

more
http://business.guardian.co.uk/story/0,,1745467,00.html

[eleny]

1. He really must drive the multi nationals to a bar stool

If Chavez has faults, they're surely minimized by his humanity. I've been saying tonight that some people have more ambition than integrity. Chavez has integrity and this informs his ambitions. A good man.

[VirtualChicano]

2. I agree

at first i saw chavez as manuel noriega part deux but as i started to learn more about him i began to like the man.

[eleny]

3. Welcome to DU!

About Chavez. As he implements his policies, we learn who he really is.

[VirtualChicano]

4. Thanks for the welcome

:)

[bemildred]

6. And a most unusual combination. nt

[dweller]

5. 1st, VIVA CHAVEZ!

secondly, does anyone know what gasoline sold /gal when oil last sold at $50/barrel?


i have to admit, i love the way Pres. Chavez thinks.
dp

[MaryBear]

7. Indeed.

Buy Citgo gasoline!

[guajira]

17. I Buy Only Citgo!!

Months ago I pledged to myself to buy Citgo unless there was no other choice!

If we all do that, it could have an impact on the price of oil.

LET'S DO IT!!!!

[lovuian]

8. This will drive the Saudis nuts!!!

cause it will put a new country on the big influence list...

I think Chavez recognizes that he has no army to defend himself so by offering cheap oil
he can knock two of his worst enemies off their agendas...

[BrotherBuzz]

10. Venezuela is hardly a new country on the big influence list

Venezuela has been an original charter member of OPEC for over 45 years. Interesting though, this could be an indication that Chavez might be willing to part fwith OPEC and shake thinks up a bit . I guess Hugo's idea of market stability is a little different than the Saudis and other Middle East oil barrons. Same shit, different perspective.

[MaryBear]

11. Glad to see

you got home safely despite the apple juice. Hope your family feels better soon and you stay well. Next get together, let's talk more about Chavez.

[mike_c]

9. viva Chavez!

:popcorn:

[rfkrfk]

12. the 'peg' means nothing outside of OPEC

HC wants a bigger OPEC quota

if the peg goes to 50, Venezuela gets a bigger
percentage of the OPEC quota, becuse Ven.
has lots of reserves that are
pumpable at 50, {edit-add,but not supposedly economicaly pumpable at 35},in other words,
Ven's reservers go up faster-percentage than other countries

[Starfury]

13. He better double his bodyguard.... n/t

[struggle4progress]

15. Cheney's energy cabal won't be happy.

[BiggJawn]

14. His Citgo stations are the highest-priced locally.

No joke, last year when everyone else was at $3, one Citgo was at $4, and another was charging $3.60.

Last week, while everyone in town was still under $2.50, Citgo was already at $2.70.

[redqueen]

19. Really? Down here it's exactly the opposite...

Well, some stations charge the same as all the rest (for the past week around $2.65), but some are lower than average, and one Citgo is the lowest I've seen anywhere in town!

[BiggJawn]

21. Yeah, I think the local dealers are crooks.

They interviewed the $4 a gallon guy on the Glass Tit and he was all "I only charge what my distributor tells me to. Good bye, you're costing me money if you're not going to buy anything. Good bye..."

And the other one is the closest gas to campus, so he's got a captive audience who just phones home and says "Mom? Duh, like I can't keep the Explorer filled up? I need more gas money? Like, Duh?"

[TX-RAT]

16. Make it 35.00 and we got a deal.

50 a barrel is still to high. Producers make a damn nice profit at 35.00.

[Poll_Blind]

18. The economic vaibility price point for their type of oil is about $40.

So something like $45 would be fair. When oil is $60+ (~$65 right now, IIRC), $50 a drum is a good deal.

To wit, from the article:

According to US sources, Venezuela holds 90% of the world's extra heavy crude oil - deposits which have to be turned into synthetic light crude before they can be refined and which only become economic to operate with the oil price at about $40 a barrel.

PB

[robertpaulsen]

20. Say what? DoE estimates Venezuela controls 1.3 TRILLION barrels of oil!

Analysis by the US Department of Energy (DoE) - seen by Newsnight - shows that at $50 a barrel Venezuela - not Saudi Arabia - will have the biggest oil reserves in Opec.

Venezuela has vast deposits of extra-heavy oil in the Orinoco. Traditionally these have not been counted because at $20 a barrel they were too expensive to exploit - but at $50 a barrel melting them into liquid petroleum becomes extremely profitable.

snip

The DoE estimates that the Venezuelan government controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet.

Mr Chavez told Newsnight that "Venezuela has the largest oil reserves in the world. In the future Venezuela won't have any more oil - but that's in the 22nd Century."

http://news.bbc.co.uk/2/hi/americas/4871938.stm


Question is, how do you put a stop to the "War That Will Not End in Our Lifetime" so that the world can be sure that this oil is truly recoverable?

[EVDebs]

23. My thoughts exactly !

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x828967

[EVDebs]

22. A democratic President/Congress could deal with Chavez effectively

The Bush team tries to kill the guy. Go figure.