Reply #75: Chávez seeks to peg oil at $50 a barrel [View All]

[UpInArms]

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

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.

...more...

from the BBC

Chavez rules out return to cheap oil

In an interview with BBC Newsnight's Greg Palast, Mr Chavez - who is due to host the Opec meeting on 1 June in Caracas - said he would ask the oil cartel to set $50 a barrel as the long term level.

During the 1990s the price of oil had hovered around the $20 mark falling as low as $10 a barrel in early 1999.

"We're trying to find an equilibrium. The price of oil could remain at the low level of $50. That's a fair price it's not a high price," Mr Chavez said.

He will have added clout at this Opec meeting.

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.

...more...