Venezuela: US plan to tap oil reserves unsustainable

CABRUTICA: Venezuela said on Tuesday that a plan by the United States and Britain to tap strategic oil reserves was unsu
20 Mar, 2012

Oil Minister Rafael Ramirez said OPEC had no plans to hold an extraordinary meeting to discuss the issue, which he said was primarily a political move ahead of November's presidential election in the United States.

"We've always maintained that these releases of strategic oil reserves are unsustainable over time the release will have no effect on prices," Ramirez told reporters.

"Right now, obviously, Mr. Obama's electoral agenda is forcing a move to try to slow the rise of fuel prices that are affecting the US economy a lot."

Reuters reported last week that the United States and Britain were preparing a release from strategic oil reserves this year.

Rising world oil prices have pushed U.S gasoline prices up sharply this year and threaten to choke US economic recovery ahead of President Barack Obama's bid for re-election.

Details of the timing, volume and duration of the planned emergency drawdown have yet to be released, but a detailed agreement was expected by the summer, a British source said.

Top exporter Saudi Arabia sought to soothe fears about high oil prices, saying on Tuesday that world supplies were well in excess of demand and that the kingdom was ready to raise output if needed.

But Ramirez said Venezuela had little faith in the ability of Middle Eastern nations that have pledged to ramp up supply in the event of further disruptions to the global oil market.

"We think this is a great myth. The idle capacity of the Gulf countries would have to be reviewed, because they did not meet the promises they made during the aggression against Libya," he said.

Separately, Ramirez said Venezuela's crude production had increased by some 60,000 barrels per day during the first quarter of 2012.

"It's a significant increase, but we are going to have an explosion of production beginning in June when the installations are ready," the minister said.

The government of President Hugo Chavez has ambitious plans to boost the OPEC nation's oil output to 3.5 million bpd this year, from around 3.0 million at the end of the 2011.

Copyright Reuters, 2012

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