"We want the average oil price in the band at USD 100"

While Venezuela will propose that OPEC member countries are committed to operate in a band that fluctuates between USD 80 and USD 120 per barrel, Petroleum and Mining Minister Rafael Ramirez categorically explained that "nobody wants to be on the floor. We want the average price in the band at USD 100."

Venezuela will present the outline of the price bands at the next OPEC meeting, which will be held in December, unless the Secretary General convenes a special meeting in case of a deepening decline in oil prices, which have, in three months, had an accumulated decrease of 28% from USD 128 down to USD 92.

Rafael Ramírez said that the approach to a floor of USD 80 comes because "we will not wait for the price of a barrel to be USD 70 to sit down and discuss what the floor should be. I don't think it makes sense for anyone to have the price floor at USD 80."

No shocks

The Venezuelan oil basket feels the loss of the barrel's brighter days and ended last week at an average of USD 90 versus USD 116.47 in March. However, Rafael Ramírez argues that there is no concern in the public finances.

"Analysts should include in their studies that the average price of the Venezuelan oil basket so far this year is USD 108 a barrel, and at its worst prices, understanding that they do not collapse from one day to the other, we can expect an average price between USD 90 and USD 95 a barrel and the national budget was set at USD 50 a barrel

The government's standard practice is to, through additional public spending, end spending well above budget. But the minister indicates that oil money falls into different hands.

In 2011, Pdvsa's contribution to funds managed directly by the Executive Office such as Fonden stood at USD 39.6 billion. In the first 6 months of this year, USD 8 billion has been injected.

Before the question of how much of the funds placed are not engaged in projects and could be used to break a sharper drop in oil prices, Ramírez passes the ball to the Finance Ministry.

"I do no want to get into areas that are the responsibility of the Minister of Finance. I do not manage that information."

He highlights that we must also include in the balance that the country has additional funding sources like the Chinese Fund, which in the next few days will receive a new release of USD 4 billion that will raise the amount of obtained funds to USD 36 billion.

He then delves into this issue and states that "all the missions have the resources. Mission Housing does not depend on the issue of fluctuating oil prices. This is an agreement with the banking sector."

"We should look carefully at oil projects, but we cannot argue with the tax revenue to produce bands that are in agreement with oil companies. We do not have the ability to borrow from Pdvsa to produce more oil", he says.

Extra barrels

In analyzing the development of the Orinoco Oil Belt, Rafael Ramírez noted that before the year is over, production in Venezuela will pick up. It currently stands at 3.11 million barrels a day with somewhere between 160,000 and 168,000 barrels from the partnerships with Petrovietnam, a Russian consortium and one of Pdvsa's own plans.

The official goal is to increase production to 3.5 million barrels a day this year, mainly through the development of the Orinoco Oil Belt. By the end of 2014, we should reach 4 million barrels.

vsalmeron @eluniversal.com

Translated by Alejandro Osio