Posted on 03/21/2002 12:48:45 AM PST by Cincinatus' Wife
JOSE, Venezuela, March 20 (Reuters) - Venezuela's rapidly rising production of foreign-financed synthetic crude is providing the United States with a new stable supply of oil outside the Middle East, according to oil analysts.
Amid concerns over Gulf exports, Venezuela Wednesday formally launched its $4 billion Sincor project, slated to give U.S. markets another 180,000 barrels per day (bpd) of light oil, which analysts say will not count as part of the Venezuelan OPEC quota.
``That crude will come straight to the United States, and directly challenge light Saudi Arabian crude at a time when the market is going to be looking hard for incremental barrels,'' said Jay Saunders, oil analyst for Deutsche Banc.
The Sincor project comes as analysts worry that OPEC's strict supply caps on low-cost oil could hike energy prices and possible U.S. military action against oil exporter Iraq as part of its war on terrorism might disrupt global oil flows.
President George W. Bush has made diversifying U.S. energy supplies a top priority of his administration. Nations from the politically volatile Middle East, including Iraq, provide over 25 percent of U.S. oil imports and the dependency is only expected to grow in coming years.
With an estimated 300 billion barrels of extra heavy oil reserves -- considered too heavy to count toward Venezuela's OPEC quota -- the Orinoco tar belt is the largest hydrocarbons reserve outside of the Middle East.
Sincor and three other heavy oil projects will export a total of 420,000 bpd from Venezuela to the United States by next year.
Markets will be seeking oil after OPEC last week said it would keep in place through June a stringent price-supporting deal reached in December, analysts said.
``U.S. refinery runs will probably increase sharply in the second quarter, and if you don't get decent imports, crude inventories could draw at a time when they normally build (ahead of the U.S. summer driving season),'' Saunders said.
HEAVY COMPETITION
Growing supplies of unconventional upgraded oil will challenge Venezuela's OPEC partner and cartel kingpin Saudi Arabia and other large Gulf exporters for market share in the United States.
``One thing I think the Saudis understand is the competition of very large reserves,'' said Amy Jaffe Myers, consultant for the Baker Institute for Public Policy.
Sincor brings together as partners France's TotalFinaElf with Norway's Statoil and Venezuela's state
Pdvsa,
Two other foreign-backed projects, Cerro Negro and Petrozuata, started up last year and are producing 240,000 bpd of upgraded synthetic crude from the region.
With the completion of the Hamaca upgrader in late 2003, Venezuela will be exporting around 600,000 bpd of synthetic crude, mostly to the United States.
The projects transport the nearly solid 8 to 10 degree API oil from the southeast Orinoco region to the Caribbean port of Jose in northeastern Venezuela for upgrading and export.
The first shipment of Sincor will go to TotalFinaElf's refinery in Port Arthur, Texas, this month. Sincor is expected to hit full production by the end of the year.
U.S. refiner Ultramar Diamond Shamrock Corp., a unit of Valero Energy Corp. has signed a three-year contract to take 45,000 bpd of the new ``Zuata Sweet'' crude to its Three Rivers refinery near Corpus Christi, Texas.
While analysts and oil companies warn that new oil terms put in place under Venezuela's new hydrocarbon's law may prevent further heavy oil investment, the Ministry of Energy and Mines said the tar belt would provide stable supply for decades.
``We have oil in the Orinoco to last for the next 35 to 40 years,'' said a Ministry spokesman.
Fedepetrol, the largest oil union, said Wednesday it would back a general strike if convoked by managers. Executives have expressed reluctance to shut down an industry that provides 80 percent of Venezuela's export revenue and is the third-largest provider of crude oil to the United States.[End Excerpt]
At this LINK full story to (March 1, 2002)-- Venezuela's strongman faces widespread calls to step down By Phil Gunson | Special to The Christian Science Monitor
Venezuela: Labor Strife of a Different Collar - Pdvsa-[Excerpt] CARACAS, Venezuela, March 18 - Petróleos de Venezuela S.A. may be state owned, but it is known internationally as efficient and well managed, even cutting edge. The company, one of the world's largest oil producers, has also long attracted the brightest minds in Venezuela to its singular task: producing the huge amounts of oil that motor this country.
Now, however, the behemoth, with $20 billion a year in oil sales and 40,000 employees, is in turmoil.
Its white-collar workers are locked in a bitter feud with the government of President Hugo Chávez, whose firing of the company president last month precipitated a rousing, public quarrel that has dominated the local headlines, caused a work slowdown and threatens to spill into a full- fledged strike. Such an event would be calamitous for a country where oil accounts for 80 percent of exports, most of it bound for the United States.
"This is a tragedy," said Luis Giusti, a former company president and now senior adviser for the Center for Strategic and International Studies in Washington. "It is inconceivable that in this company people would go out and protest. They would have been fired right away. But this is a crisis situation." [End Excerpt]
"I'm going to be tough about it," Bush told a group of regional reporters Tuesday in a preview of his trip. "I'm not interested in funding corruption."
Bush separately had some tough talk about Venezuela's President Hugo Chavez. The image of the world's No. 4 oil exporter has taken a beating in recent months as opponents of the maverick left-wing president have stepped up protests against his three-year rule, raising fears that political confrontation may worsen and even turn to violence.
"We are concerned about Venezuela," Bush said, citing the long-term U.S. relationship with the country, particularly in the oil business.
"We are concerned any time there is unrest in our neighborhood. We are watching the situation carefully. This man was elected by the people. We respect democracy in our country, and we hope he respects the democratic institutions within his country," the president said. [End Excerpt]
``The current situation has led to political polarization and a sense of frustration among the population at large, including the business and labor sectors, the Catholic church, and the military,'' S&P said in a statement.
``This, in conjunction with presidential statements about the possibility of nationalizing banks ... and the danger of exchange controls or a state of emergency, have created an environment that is not conducive to investment and growth.''
The ratings agency affirmed Venezuela's single-B long- and short-term foreign currency sovereign credit ratings. At single B, the ratings are five notches below investment grade.
A downgrade would increase the cost of borrowing for the world's No. 4 oil exporter at a time when President Hugo Chavez is facing stiff domestic opposition to his leftist agenda and authoritarian style. [End Excerpt]
Chavez, a 47-year-old former paratrooper who has strengthened oil-rich Venezuela's ties with Communist Cuba, has often praised Castro's socialist revolution and expressed similar anti-capitalist and "anti-imperialist" views.
Hailing the Venezuelan leader's "spirit and enthusiasm", the veteran Cuban president said Chavez would address the U.N. conference in Mexico as president of the Group of 77, which represents more than 130 developing countries.
"No other voice could be better than yours to defend the interests of the (Group of) 77. ... You will have the possibility of putting forward the point of view of the progressive people of the world," Castro added.[End Excerpt]
Several people were hurt in the disturbances, which reflect growing political tensions in the world's fourth largest oil exporter, where left-wing populist Chavez is facing growing opposition to his three-year-old rule.
Fierce fighting broke out in Barquisimeto, 218 miles (351 km) west of Caracas, when followers of the outspoken president confronted members of Venezuela's Workers Confederation, or CTV, the country's largest trade union, which has spearheaded labor opposition to Chavez.[End Excerpt]
Say, wouldn't it be great if we could produce and refine our own oil right here in the US? Nawwwwww....too simple.
....and too good for national security. You're right, it's a non-starter with Daschle and the Democrats holding the Senate and the U.S. hostage.
Dissident managers at Petroleos de Venezuela SA claimed that about 75 percent of their colleagues stayed home, Dow Jones Newswires reported, quoting a company official who declined to be identified.
Production at the company, a key producer of oil for the United States, wasn't affected. Blue-collar labor unions support the dissident managers but didn't participate Thursday.
The managers want Chavez to rescind his February appointments of five directors to the company's board, claiming they aren't qualified and form part of an effort to exert increased government control over the monopoly's finances. Chavez says the directors are fully qualified, and his government has repeatedly warned the protesters they could be fired.
A full-blown strike by both management and blue-collar workers appeared remote. Some managers have said they're willing to accept a compromise in which additional directors who would better represent company interests are appointed.
But Thursday's action exacerbated tensions at the company, which employs 40,000 people and is Venezuela's key income source.
Nicolas Maduro, a legislator with Chavez's Fifth Republic Movement party, claimed there were various "acts of sabotage" at company facilities across the nation. Without providing details, he said the perpetrators would be brought to justice. [End]
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