OREANDA-NEWS. June 19, 2012. “We defend in all possible scenarios the right to exercise permanent sovereignty over our natural resources and fair reward and benefit to our people. In this context of respect and sovereignty, we advocate sincere and constructive dialogue with consuming countries”, said People's Minister of Petroleum and Mining, Rafael Ramirez, in the 5th International Seminar of OPEC in Vienna, Austria, under the theme "Oil: promoting prosperity and sustainable development."

In this event, attended by government representatives from oil-producing countries, representatives of consumer countries and oil companies, Ramirez questioned the role of institutions, which should disclose and reconcile the interests of producers and consumers, such as the Joint Organization Data Initiative (JODI) and the International Energy Agency, whose performance in many cases is far from encouraging dialogue and a more transparent and timely release of information and data.

"For example, the International Energy Agency is one of the main sponsors of JODI, but to prepare their own estimates of OPEC production, deliberately discarded the official figures of the member countries. This has resulted in significant differences that only help to confound the market about the true state of the world oil supply", he said.

The Minister explained that in the case of Venezuelan production, the difference between the estimates of the IEA and official figures reached a peak of 750 thousand barrels per day. "The Agency never gave an explanation of why these differences emerged, nor did when recently adjusted their estimates upward, even in retrospect", he complained.

In his speech, Ramirez also criticized actions that prevent an open dialogue, that should be encouraged by the International Energy Forum. This dialogue was absent when the member countries of the International Energy Agency countries decided, unilaterally and in parallel to NATO air strikes to Libya, to release strategic petroleum stocks. "What about the institutional dialogue between OPEC and the European Union, when the UE moves forward with an ever more severe embargo against the oil exports of Iran, a founding member of OPEC? Where does that leave the principles of freedom of commerce and market transparency?", he asked.

Legitimate right to a fair remuneration

Venezuelan Minister of Petroleum and Mining said the oil investment is hampered by the refusal on the part of consumer countries and oil companies alike to recognize the legitimate right of producing countries to receive fair remuneration in exchange for allowing the exploitation of a valuable, depletable and no-renewable natural resource that belongs to them.

In this regard, he recalled that during the decades of the 80 and 90 of the twentieth century, a number of producing countries, including Venezuela, were persuaded, pressured, led or deceived into accepting asymmetrical and unfair arrangements in which all profits and rents accrued to investors, while nothing or almost nothing  was left to the resource owner.

Ramirez said Venezuela's case was a very good illustration of a government of a sovereign country, major oil producer, which has had to concentrate their capacity in the task of restructuring and rebalance inherited projects and contracts, which were disastrously asymmetrical, like those signed in the context of the so called Oil Opening policy, and in the mean time has had to deal with disputes with companies that refused to leave that unsustainable business model, according to which foreign companies could produce large volumes of oil without generating any tax revenue in exchange for the country.

For the minister the lesson from this experience is clear: “access to natural resources will be compromised to the extent that the populations of the countries from which they are extracted feel that they are not getting their fair share from the liquidation of their collective patrimony,  and such remuneration ougth to be obteined in the form of a royalty”, however, he said that we would probabbly continue to hear through the big agencies about how producing countries should adjust their fiscal regimes downwards in order to attract the capital of international oil companies.

The Minister of Petroleum and Mining said that given the state of depletion of the bulk of readily accesible, low risk and low cost petroleum resources, a stable price level of over one hundred dollars per barrel, represents the minimum necessary if resources in more challenging or marginal locations are to be brougth on stream quickly enough to cover the market requirements and in this way promote stability in prices.