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Oil Report

World must address tight oil supply: Chavez

TEGUCIGALPA, Jan 15 (Reuters) - Venezuelan President Hugo Chavez warned on Tuesday that the world’s biggest oil consumers face shrinking supplies and that Venezuela hoped to work with Brazil and Mexico to bolster the region’s reserves.

Chavez, on an official visit to Honduras a day after attending the inauguration of Alvaro Colom as Guatemala’s new president, said the developed world needed to find ways to rein in its consumption of nonrenewable fuels.

“The United States, for example, unfortunately has very little time left, very little reserves of its own oil,” Chavez said in a speech, flanked by Honduran President Manuel Zelaya.

“Other big consumer countries already have very small reserves. The United States consumes 20 million barrels of oil per day. You see the imbalance?” he said.

Venezuela is among the top five suppliers, along with Canada and Mexico, of crude oil to the United States, which swallows a quarter of what the world consumes.

Tight supply and growing demand drove world oil prices to a life peak of $100.09 a barrel earlier this month.

“One day oil is going to run out,” Chavez said. “That’s why we do not only warn when oil prices are being talked about, we say ‘you have to deal with the issue of consumption’.”

Chavez, known as an oil price hawk, said he, Mexican President Felipe Calderon and Brazil’s Luiz Inacio Lula da Silva discussed ways of joining forces in exploration when they met on Monday at Colom’s swearing-in ceremony in Guatemala.

“We were talking ... looking for a way to become partners, to form an alliance between the state companies Pemex, Petrobras and PDVSA to create new ways of cooperating to increase reserves,” Chavez said.

While all three companies are state controlled, only Mexico's Pemex and Venezuela's PDVSA are monopolies and 100 percent in government hands. The partial privatization of Brazil's Petrobras PETR4.SAPBR.N helped it spruce up operations and become a world leader in deepwater production.

Pemex is alone in being barred from forming joint ventures or partnerships with private or foreign companies in exploring or drilling for oil and natural gas, although lawmakers are currently discussing a possible loosening of the law. (Reporting by Gustavo Palencia; Writing by Catherine Bremer; Editing by Christian Wiessner)

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