Venezuela Prepares to Reduce Oil Production

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    TEMPO.CO, Jakarta - Venezuela is prepared to decrease its' crude oil production output in order to boost global oil prices should the Organization of Petroleum Exporting Countries (OPEC) agrees to put a cap on production, said Venezuela's Foreign Minister on Thursday, November 20, 2014.

    Ramirez, who had previously held the positon of Oil Minister for 12 years until September, as well as the President of Venezuela's state oil company, PDVSA, said that the fair price for one barrel of oil is around the US$100 per barrel mark.

    Ramirez also said that Venezuela is currently preparing a proposal to cut production ahead of the OPEC meeting in Vienna on November 27, 2014. It is known that Ramirez will be representing Venezuela in the upcoming OPEC meeting next week.

    However, analysts are saying that OPEC's Gulf members, led by Saudi Arabia as one of the world's largest producer, is preparing to argue against the proposal at all costs, unless other members could guarantee a significant market share for Gulf States producers.

    With prices of the Brent North Sea oil tumbling below US$80 per barrel - equivalent to a drop of 25 percent - since June, Venezuela and other oil producers are feeling the pinch.

    "Neither producers nor consumers are in favour of slipping prices, because nobody would want to invest to restore production capacity, if in a few years time, we will again see scenarios where the price is above US$100 per barrel," said Ramirez, who believes that prices could be restored simply by reducing production output.

    Ramirez conveyed his statements after embarking on a tour to OPEC and non-OPEC oil producing countries, which includes Algeria, Iran, Mexico, Qatar, Russia, and Saudi Arabia.

    According Barclays' estimates, Venezuela suffers US$720 million losses per year for every dollar drop in prices.

    It is known that 96 percent of Venezuela's foreign exchange reserves is generated by its' crude oil exports, and the on-going price crisis has added to the woes of the cash-strapped government, which is crippled by soaring inflation as well as serious shortages of food and medication - necessities that Venezuela can only afford by selling its' oil reserves.