UPDATE 3-Venezuela oil minister seeks U.S. investment

Thu Apr 15, 2010 4:09pm EDT

* In overture to US, Ramirez has 1st talks in DC in 6 yrs

* More OPEC output would end up in inventories-oilmin

* Oil market speculation causing current oil price-oilmin (adds comments from Latin America analyst)

By Timothy Gardner and Tom Doggett

WASHINGTON, April 15 (Reuters) - Venezuelan Oil Minister Rafael Ramirez on Thursday welcomed investment by U.S. oil companies to help develop his country's vast crude reserves, as he held energy talks in Washington for the first time in six years.

Ramirez said Venezuela is signing agreements with companies in Russia, China, Europe and Japan to develop its reserves and U.S. companies should be there as well.

"This United States cannot miss this opportunity," he told reporters on the sidelines of a two-day conference of Western Hemisphere countries meeting to address energy and climate change issues.

Relations between the United States and Venezuela have long been strained, hitting a particularly low point in 2006 when visiting Venezuelan President Hugo Chavez took on then-President George W. Bush at the United Nations, calling him a "devil."

Ramirez said foreign oil companies wanting to do business in Venezuela would have to "respect" the country's energy laws and policies.

Venezuela has an estimated 99.4 billion barrels of proven oil reserves, with last year's oil production averaging 2.2 million barrels per day, down 190,000 bpd from the year before. It is the world's eighth largest oil exporter and the fourth biggest foreign oil supplier to the U.S. market.

MONEY NEEDED TO TAP "HEAVY OIL"

To boost its sagging output from traditional wells, Venezuela needs foreign investment and technology to tap the heavy oil of the Orinoco belt that requires much upgrading to turn into lighter crude.

Venezuela was criticized several years ago when it forced foreign companies to renegotiate their oil development contracts, reducing their profits. Several companies, including those U.S.-based, sold their stakes instead of following the Venezuelan government's new terms.

Leading U.S. oil companies Exxon Mobil (XOM.N) and ConocoPhillips (COP.N), left Venezuela in 2007 after being pushed out of multibillion-dollar Orinoco projects.

Before Thursday, Ramirez had not held energy talks in Washington since 2004. He said Venezuelan-U.S. relations had been hurt by the Bush administration, which he said had been "hostile" to his country.

"There's no reason whatsoever for this relationship to have been halted," he said. Ramirez said he expected to have a private meeting with his U.S. counterpart, Energy Secretary Steven Chu, during the conference.

Patrick Esteruelas, Latin America analyst at Eurasia Group in New York, said he did not think Ramirez's comments about U.S. firms was significant because Venezuela has not discriminated against companies from specific countries.

"It has just demanded an equally aggressive share of the (oilfield) rent from all willing investors...very few U.S. companies have shown much willingness to go in and swallow that pill," he said.

MORE OPEC OIL NOT NEEDED

On oil market issues, Ramirez said OPEC will not increase petroleum output to bring down oil costs, even though crude prices have been hovering near 18-month highs.

Global oil inventories are "very high" because demand is low, Ramirez said. Any additional output from the Organization of the Petroleum Exporting Countries would end up in inventories rather than satisfying consumer demand, he said.

"As long as there is no robust increase in demand there will be no increase in supply," said Ramirez.

Oil prices settled near $86 a barrel on Thursday on strong economic data from China, a weaker dollar, and an unexpected drop in U.S. crude inventories. [O/R]

Ramirez side-stepped questions about whether oil prices above $80 to $90 per barrel would hurt global economic growth, saying that high prices were caused by market players betting on the price.

"The current price is result of speculation in oil markets," said Ramirez.

Current prices are stronger than the $70 to $80 range that OPEC ministers said last month is good for both producers and consumers.

(Reporting by Timothy Gardner and Tom Doggett; Editing by Lisa Shumaker and Bob Burgdorfer)