Venezuela to increase oil production to 2 million barrels a day by 2008

May 5, 2003, 10:36PM By MICHAEL DAVIS Houston Chronicle

Venezuela is back to its pre-strike oil production level, and now the national oil company says it plans to increase production 2 million barrels a day by 2008.

Officials from Petroleos de Venezuela SA, including Chief Executive Ali Rodriguez, were in Houston on Monday as part of a series of conferences the national oil company is holding aimed at restoring investor confidence following the devastating strikes that began in December and virtually shut down the Venezuelan oil industry for three months.

Many dispute the current production figures coming out of Venezuela. A Bloomberg Survey released Monday pegged the country's production at 2.59 million barrels per day, up 340,000 a day over March production.

Rodriguez challenged those estimates, saying oil production is back to 3.2 million barrels per day and said Venezuela has recently made some significant new discoveries including a giant field south of Lake Maracaibo that could hold as much as 1 billion barrels.

The goal of the strikes was to oust President Hugo Chavez, but he remains in office. Strikers tried to use oil as a political weapon, something that had never been done before in a country that garners a majority of its revenues from oil.

Rodriguez referred to the strikers as people who abandoned the company and country. Some 18,000 PDVSA strikers were fired.

"The crisis we endured in late 2002 and early 2003 was not only unusual but also unprecedented in the history of the Venezuelan oil industry," Rodriguez said at a news conference.

Restarting the nation's oil industry was a "daunting task," Rodriguez said. The company used retirees and volunteers to replace workers who left their jobs. The military was used to prevent sabotage and keep order.

OPEC quotas will likely rise as demand increases, meaning Venezuela will not find itself at odds with other OPEC members as it increases its production to a desired 5.1 million barrels per day over the next five years, he said.

Most OPEC countries are producing as much oil as their infrastructure can support. Venezuela is one of six cartel countries that can expand production capacity, Rodriguez said.

Of the $43 billion the country expects to spend over the next five years to increase its production, 46 percent of that will come from the national and international private sector, Rodriguez said.

The country is preparing to offer some offshore blocks for natural gas exploration, a large element of the company's new business plan. Venezuela has an estimated 148 trillion cubic feet of natural gas. It plans to begin exporting liquefied natural gas to the United States once processing facilities are complete.

Five offshore natural gas blocks have been identified so far, two of which have been awarded to Statoil and ChevronTexaco. The other three blocks will likely be offered later this year, officials said.