- The Washington Times - Wednesday, April 1, 2009

CARACAS, Venezuela _ Venezuela increased oil shipments to the United States in January, despite President Hugo Chavez’s anti-U.S. rhetoric and a promise to OPEC to cut output, the U.S. Department of Energy said Wednesday.

Crude shipments from Venezuela to the U.S. rose to an average 1.2 million barrels a day in January, up 14 percent from December, according to data from the department. Venezuela had promised to cut exports to the U.S. by 16 percent starting Jan. 1 to comply with OPEC cuts.

But January’s figures suggest the country, the world’s 11th biggest oil producer, is still sending about half its crude to the U.S.

Venezuela may be sending more oil north to boost sagging state income, which has declined with lower crude prices, said Roger Tissot, an energy analyst at Gas Energy Latin America in Vernon, Canada. Oil accounts for 93 percent of Venezuelan exports and finances nearly half the government’s budget, but world crude prices have slipped 67 percent since their July peak.

A spokesman for Petroleos de Venezuela SA, Venezuela’s state oil company, declined to comment on the U.S. report.

Chavez has often vowed to diversify Venezuelan oil markets, slashing its reliance on the U.S. and boosting exports to allies such as China. When OPEC asked its 12 members to reduce output by a combined 4.2 million barrels a day in January, Venezuela agreed to a 364,000 barrels-a-day cut, 11 percent of total production, and vowed the bulk of those cuts would come from exports to the U.S.

But tough times may now be stalling those plans, said Tissot, who suggested it’d be easier for Venezuela to cut expensive, long-distance shipments to China, or discounted sales Latin American and Caribbean neighbors under Venezuela’s Petrocaribe pact instead.

“The U.S. is a prime market” that’s nearby and pays full price, Tissot said.

Venezuela may also be ignoring its commitment to the Organization of the Petroleum Exporting Countries, complying only partially with cuts to maintain its income, said David Kirsh, director of PFC Energy’s Market Intelligence Service in Washington.

According to the Paris-based International Energy Agency, Venezuela has reduced output by just two-thirds of OPEC’s terms, pumping an average 2.1 million barrels a day in February.

Venezuela’s government denies those claims. Still, it has long insisted its output is more than international observers estimate and says it now produces 3 million barrels a day.

Yet falling oil income has forced Chavez to cut spending for 2009 by 6.7 percent, seek to boost sales taxes and issue an additional $10.2 billion in public debt this year.

“Venezuela will try to get by with the lowest amount of compliance that it can,” said Kirsh. “It needs the money.”



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