Tuesday, July 24, 2007

Venezuela's energy minister says state oil company struggling with 'operational emergency'

Finally, the government admits that the state-owned oil industry has problems.

Venezuela's energy minister says state oil company struggling with 'operational emergency'
The Associated Press
Published: July 24, 2007

CARACAS, Venezuela: Venezuela's state oil company is struggling with an "operational emergency" because it has not been able to hire enough oil drilling rigs, the country's oil minister said in published remarks Tuesday.

Rafael Ramirez told the El Universal daily that Venezuela's state-run oil company, Petroleos de Venezuela SA, or PDVSA, needs to hire dozens more rigs to reach rising production targets.

"There's effectively an operational emergency and the board (of directors) determined this because if we do not accelerate the (oil rig) tender process, a situation is going to arise that could prevent production plans from being reached," Ramirez was quoted as saying.

Tuesday was a national holiday in Venezuela and oil ministry spokesmen were not available to confirm Ramirez's published comments.

Some industry watchdogs have said Venezuela's crude output is falling partly because of the rig shortage. The Paris-based International Energy Agency, which collects and analyzes statistics related to the international oil market, calculates that oil output in Venezuela — a major supplier of crude to the United States — has fallen to 2.37 million barrels a day, down from 2.6 million barrels a day a year ago.

Venezuela claims to be producing more than 3 million barrels a day.

"We hope to reach 3.2 million barrels by the end of the year," Ramirez said.

Venezuela has traditionally hired rigs from foreign companies, including the U.S.-based firms Halliburton Co. and Schlumberger Ltd, but the oil-rich South American nation is gradually moving to take complete control over rig operations.

It has struck a deal with China National Petroleum Corp. to begin assembling drilling rigs in Venezuela, a major part of PDVSA's plan to gain its own rig fleet. Production of the rigs is expected to begin within two years.

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