Venezuelan oil industry no longer in crisis, president says

www.canada.com Canadian Press Thursday, March 06, 2003

CARACAS (AP) - Venezuela's state oil monopoly is no longer in an emergency situation and is now able to fulfil its business contracts after output reached 2.6 million barrels a day Thursday, President Hugo Chavez announced.

Petroleos de Venezuela S.A. declared a "force majeure" in December, meaning a force out of the company's control made it impossible to fulfil contracts to supply oil. The force majeure had been in place since Dec. 5, three days after thousands of oil workers joined a failed general strike to demand early elections.

The strike ended last month and Venezuela began gradually restoring production. Last month, PDVSA lifted a force majeure of on three types of crude oil produced in eastern Venezuela. Chavez said the force majeure on the rest of the types had been lifted Thursday.

The South American country was the world's fifth-largest oil exporter before the strike, producing 3.2 million barrels a day.

Output plunged to 200,000 barrels a day at the height of the walkout, depriving the country of the source of one-half of the government's income and 80 per cent of export revenue. Venezuela still has to import gasoline because of difficulties in bringing refineries back online.

"It was a great battle," Chavez said at the inauguration of PDVSA's new board of directors.

"I announce to the world and our clients that...we have decided to fully lift the force majeure."

On Thursday, Energy and Mines Minister Rafael Ramirez told state news agency Venpres that Venezuela would reach its OPEC output quota of 2.8 million barrels a day in "the next hours."

Chavez has fired 15,000 of PDVSA's 35,000 employees for joining the strike.

International industry experts have warned Venezuela lacks the manpower and funds to fully restore production in older fields, where oil is harder to extract. Experts expressed doubt Venezuelan output could surpass two million barrels a day.

In a report Thursday, fired executives insisted production was only 1.09 million barrels a day. The executives said the government has not recovered the 500,000 barrels a day it was forced to cut last week due to a slowdown in exports and build up in storage tanks.

PDVSA port officials said Wednesday the 500,000 barrels a day had been recovered.

Later Thursday, Ramirez said Venezuela would support a decision by the Organization of Petroleum Exporting Countries to suspend its quota system during a war in Iraq.

Speaking before the inauguration of PDVSA's new board of directors, Ramirez wouldn't comment on Venezuela's individual position on the matter, however. Chavez would not comment on the matter after the inauguration ceremony.

The 11-member OPEC is meeting March 11 in Vienna to re-evaluate its production quotas.