- The Washington Times - Friday, February 28, 2003

Venezuelan energy officials this week sought to reassure the United States and oil markets that crude oil production is returning to normal after a crippling strike that began late last year.
But in meetings this week, the U.S. State Department warned Venezuela that its reliability as a strategic oil partner is in doubt. At the same time, oil prices reached 12-year highs as cold weather and the specter of war with Iraq drove prices near $40 per barrel.
Venezuela last year was the United States' fourth-biggest crude oil supplier, but in December a nationwide strike all but shut down production at Petroleos de Venezuela, the country's state-owned oil monopoly.
The nationwide strike ended Feb. 4, but sporadic demonstrations and violent outbursts have continued.
Political strife and a severe economic slowdown have plagued the country as President Hugo Chavez has held on to power while opponents seek a referendum on ending his rule. Demonstrations yesterday forced a suspension of talks between government and opposition delegates on ending the political turmoil, the Associated Press reported.
"As far as we're concerned, the political impasse is really undermining Venezuela as a reliable energy supplier," said Charles Barclay, spokesman for the State Department's Bureau of Western Hemisphere Affairs. Officials at the State Department conveyed that message during a meeting Tuesday.
Rafael Ramirez, Venezuela's energy and mines minister, and Ali Rodriguez, head of Petroleos de Venezuela, both of whom met with State and Energy department officials, were in town to tell government and business groups that their government has regained control of the energy situation.
"It is within our own hands to supply all of the market demand. We wish to transmit this good news directly to the United States, to clear up all the doubts and conjectures that have naturally risen as part of this situation," Mr. Ramirez said yesterday in a meeting with reporters.
At the beginning of January, Venezuela produced only 150,000 barrels of oil per day. As of yesterday, production reached 2.08 million barrels per day, Mr. Ramirez said.
By the end of March, Venezuela's production should reach 2.9 million barrels per day, he said.
For most of 2002, before the strike, Venezuela produced about 2.9 million barrels of oil per day, with 2.4 million of that exported, the U.S. Energy Information Agency said.
Prior to the strike, Venezuela supplied about 12 percent of the United States' oil imports, making it the fourth-biggest supplier after Canada, Saudi Arabia and Mexico.
The political situation in Venezuela has stoked U.S. oil prices this year, along with a particularly cold winter that has increased heating needs, and worries that Middle East oil supplies could be disrupted by a war with Iraq.
"The Venezuela strike … has been a big part of the run-up in oil prices. The strike cost the world a tremendous amount of oil," said Phil Flynn, an energy analyst with Alaron Trading in Chicago.
Oil prices were $27.24 per barrel Dec. 2, the day the Venezuela strike started.
Yesterday the price spiked to near $40 before settling at $37.20 to end the day.
U.S. consumers have felt the effects of rising oil prices through rising heating oil and gasoline prices.
Even if Venezuela returns to normal production levels, the political situation makes the country an unstable source of oil, Mr. Flynn said.
The Organization of American States, a political forum for governments in the Western Hemisphere, is trying to broker a political settlement that ends the strife in Venezuela, but recent violence, attacks on foreign embassies and an apparent crackdown by Mr. Chavez have delayed meetings.


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