Minister Del Pino: "Equilibrium Prices Guarantee the Stability of the International Oil Market"

Source: www.gulfoilandgas.com 10/22/2015, Location: South America

People’s Minister of Petroleum and Mining and President of Petroleos de Venezuela, SA (PDVSA) Eulogio Del Pino, ended his visit to Vienna by announcing that Venezuela is proposing a new concept based on an “equilibrium price” to bring back the fundamental principles of OPEC, in defense of our non renewable natural resources.

Venezuela presented the proposal at the Second Technical Meeting of member countries of the Organization of Petroleum Exporting Countries (OPEC) and major non OPEC producers.

Minister Del Pino said that the so-called equilibrium price will guarantee the investment required to replace the barrels that potentially will stop being produced in the short term, as a direct result of a significant and already visible investment decline in the oil sector. This investment is required to replace production with a view to maintaining a balance between supply and demand.

On a TeleSUR interview Minister Del Pino, who was head of the Venezuelan delegation to the Second OPEC - Non OPEC Technical Meeting, explained that based on a conservative rate of decline of 10%, in a price scenario of $ 40 per barrel, only 70% of current production can be replaced. "There is much talk of changes in demand, but little thought about the producer side, which has a rate of decline. These barrels that are being produced have to be replaced, because it is a non renewable natural resource and reservoirs are finite", he said.

"Producer countries have a responsibility to humanity to supply more than 92 million barrels per day and supply that oil at reasonable prices that allow, in a sustainable manner, to develop the projects that are required to replace production”, he said. "The equilibrium price guarantees that energy supply to the world in a stable and balanced manner", said the also president of PDVSA.

This new methodology proposed by Venezuela will allow producers to respond to increased oil demand, estimated at more than 1% for 2016, and would pave the way for the industry to receive the levels of investment required in a sustained manner. And the market will not suffer price swings that are counterproductive for both producer nations, and consumers.

A responsible proposal for all

Minister Del Pino said that the proposal has been well received by the participants to the Second Technical Meeting in Vienna, especially by major producers such as Russia and Saudi Arabia, whose representations participated in the deliberations. These two nations combined produce 20 million barrels per day, representing a little more than a fifth of the global supply of oil per day.

"Venezuela, in a responsible way, came to propose OPEC to make corrections at this time, we still have time, and that all OPEC and non-OPEC producers are capable of doing the necessary coordination to set up those equilibrium prices so that these perverse cycles do not occur again in the future”, he said.


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