Venezuela says global crude output has to fall 10pc

OREANDA-NEWS. September 20, 2016. Current world crude production of 94mn b/d must be cut to 85mn b/d to sustain consumption levels at a "fair equilibrium price", Venezuela's energy minister and state-owned PdV chief executive Eulogio Del Pino said today

Del Pino's remarks, made in an interview with PdV TV, come a day after Venezuelan President Nicholas Maduro said Opec and non-Opec producers are nearing an agreement on curbing production. Opec and some non-Opec producers will meet in Algiers on the sidelines of the International Energy Forum (IEF), which will be held on 26-28 September.

"We are close to an agreement between Opec and non-Opec producer countries, and we hope to announce the agreement to stabilize the market and improve oil prices this very month of September," Maduro said. Although some producers have signalled they will call for an output freeze to support oil prices, Opec's secretary-general Mohammed Barkindo has poured cold water on prospects for collective action in Algiers to support crude prices. "It is an informal meeting," Barkindo said on his arrival in Algiers on 17 September. "It is not a decision-making meeting."

PdV has slashed operating costs by a third since the start of 2016 to compensate the steep drop in oil prices since mid-2015, Del Pino said on the PdV TV interview broadcast internally to the company's over 140,000 employees.

Production costs "in all areas of the country now average between \\$8/bl and \\$9/bl," Del Pino said, without offering more details of PdV's operational costs structure.

PdV's export price this year is averaging about \\$32/bl, compared with \\$44/bl in 2015, Del Pino said. PdV's export price has been declining for five years, averaging \\$88/bl in 2014 and over \\$100/bl from 2011-13, energy ministry figures show.

PdV "is maintaining all operations and projects" despite sharply lower prices and a decline of over 75pc in the country's hard currency revenues since mid-2015. PdV accounts for over 95pc of Venezuela's total yearly hard currency revenue.