Is Venezuela Incapable of Increasing Oil Production?

from Yahoo Finance

CARACAS (Reuters) - Venezuela will continue to boost oil exports to China and India to capitalize on their booming economies, the OPEC member's oil minister said on Thursday.

"That's where we have to keep building our markets because those are the countries that have the biggest year-on-year growth," Asdrubal Chavez told a parliamentary committee.

"We're going to keep increasing our shipments to Asia: India and China," he added, without specifying figures.

Venezuela's exports of crude oil and refined products slipped 5.6 percent in 2013 from the year earlier to 2.43 million barrels per day, according to state oil company PDVSA [PDVSA.UL].

The United States remains the top destination for Venezuelan oil exports. But shipments are down 49 percent from a decade ago, according to the U.S. Energy Information Administration, as Venezuela's socialist government seeks to wean itself from dependence on its ideological foe to the north.

Meanwhile, Asia has become an increasingly important market for Caracas.

Venezuela has said it exports roughly 500,000 bpd of crude oil to China, part of which is used to pay off oil-for-financing agreements. The country exported more than 400,000 bpd to India last year, according to EIA estimates.

"Our job is to keep diversifying our markets," Chavez said.

His comments come after Venezuelan President Nicolas Maduro blamed the U.S. shale boom for tumbling oil prices. The slump has come at a delicate time for cash-strapped Venezuela, which needs to shore up its coffers to cover multibillion-dollar bond payments and growing arrears with the private sector.

The Venezuelan petroleum export basket, which includes crude oil and refined products, was at $72 dollars per barrel on Thursday, Chavez said.

"This is a scenario that will continue as long as certain market imbalances aren't corrected," he said, blaming the oil price slump on "an economic war and a financial war in the international market".

Maduro blames Venezuela's severe economic crisis on saboteurs out to topple him and accuses the United States of seeking to destabilize Russia by "flooding" the market with oil.

Separately, the new head of PDVSA, Eulogio del Pino, told the committee that the company aims to keep producing roughly 3 million bpd and exporting around 2.5 million.

Venezuela is pinning its hopes for increased production on new projects in the Orinoco region, where PDVSA says output is now 1.27 million bpd and set to pass 1.3 million by the end of this year.

(Writing by Alexandra Ulmer; Editing by Peter Galloway)