Oil Slide Puts Venezuela Projects under Pressure

Source: Reuters 10/15/2014, Location: South America

The recent slide in global oil prices puts projects under heavy pressure, executives at two major production companies told an industry conference in Venezuela.

A four-month rout, which stemmed from signs of lower growth and oil demand in Europe coupled with expectations that OPEC's core Gulf members are in no hurry to cut production, has left Brent crude below $85.

"This scenario puts projects in Venezuela under big pressure," Chevron Latin America Managing Director Kelly Hartshorn said at the Margarita Island gathering.

U.S.-based Chevron and state oil company PDVSA operate the Petroboscan heavy crude joint venture in western Venezuela. Chevron also has a share in the Petropiar oil upgrader in the Orinoco belt.

Separately, Statoil Venezuela official Luisa Cipollitti said at the conference that "mega-projects" globally were under threat from the price fall.

"Prices have fallen and we don't know if in the future there will be enough to cover the cost of these projects," she said. Cipollitti estimated that more than half of the world's biggest 163 oil projects required a $120 price for crude.

"It's a big challenge that means the industry has to improve its efficiency rates, lower costs and increase capacity," she added.


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