Minister: Venezuela not selling crude below production costs

Venezuelan minister of petroleum and mining and president of Petróleos de Venezuela, S.A. has rebuffed allegations the country has been selling oil below its production costs.

According to a statement shared by the PDVSA, the country’s oil company, minister Eulogio Del Pino said that the average cost of oil production in Venezuela, an OPEC member, is $13 per barrel.

Minister Del Pino explained that this average includes production costs of different oil fields, ranging from an amount lower than $5 a barrel, and higher amounts that include enhanced recovery and crude upgrading.

The minister denied that PDVSA production cost is $20 per barrel and that the corporation is selling crude below its production costs.

He also said that in 2015 PDVSA made a significant cost reduction and “this year we are proposing an additional reduction in the order of 28%, which will allow us to bring crude production costs below $10 per barrel. We are preparing to keep profitability as a company in a more difficult year for the prices.”

Venezuela, a country with one of the largest proved oil and gas reserves in the world, has been reported to have asked for an emergency OPEC meeting where it would ask the members to slash the current oil production levels in order to boost crude prices, as the low oil prices have taken a toll on its oil-powered economy.

According to a report by OPEC, the ongoing glut of crude oil and the notable slowdown in China’s economy and their predicted effects on oil demand continue to be the key factors weighing on oil prices since the sell-off in oil began 18 months ago.

Offshore Energy Today Staff