MercoPress. South Atlantic News Agency

Venezuela plans to increase oil production and refining

Venezuelan president Hugo Chavez announced that the government owned oil company, PDVSA, will build three new refineries and said he was willing to discuss a new range of prices with the Oil Producing Export Countries, OPEC

Two of the refineries will process 50,000 barrels per day each and the third, 400.000 bpd, said president Chavez in a national address giving details of the PDVSA strategic development plan for the next seven years, until 2012, which will demand 56 billion US dollars in investment and a production capacity increase from 3,3 to 5 million bpd.

"We're currently refining 1,3 million bpd. With this plan refining capacity in our territory will jump to 2 million bpd", indicated Mr. Chavez who revealed that existing plants will also be expanded.

President Chavez also argued that the current surge in oil prices has not been caused by OPEC's eleven members, but rather as consequence of "very tense geopolitical relations, particularly in the Middle East".

OPEC supplies 30% of the world's oil consumption and actually increased production to help ease prices, but with not much effect.

Last June 15 OPEC decided to increase in half a million barrels the official production quota effective July1 and totalling 28 million bpd. But OPEC actually was already pumping at the rate of 30 million bpd, equivalent to 35% global needs.

To help stabilize world oil prices Mr. Chavez suggested that a new band of prices should be agreed by OPEC members. In 2000 the band was fixes at 22/28 US dollars per barrel, and Venezuela favoured 28/35 US dollars pb.

However, "the band must now respond to the new realities of the oil market", warned the Venezuelan president.

Venezuela is the world's fifth exporter of oil and has the largest hydrocarbons reserves behind the Middle East.