Tue, Feb 28, 2006 - Page 7 News List

Venezuela warns US over oil sales

THREAT The oil minister's comments and rising sales to China may be signs that Caracas is moving to locate new buyers for its crude, according to analysts


Venezuela's oil minister, in blunt comments published in a Caracas newspaper on Sunday, warned Washington that his country could steer oil exports away from the US and toward other markets.

The minister, Rafael Ramirez, said Venezuela, which is the world's fifth-largest oil exporter and supplies more than 10 percent of US oil imports, could act in the face of what he described as aggression by the Bush government.

New buyers

Although such warnings have become part of President Hugo Chavez's verbal arsenal against the Bush administration, the comments by Ramirez, coupled with the increasing sale of Venezuelan oil to China, are seen by oil experts and political analysts as a signal that Venezuela is serious about finding new buyers.

"Physically it's very feasible, and politically it's very feasible," said Lawrence Goldstein, president of the Petroleum Industry Research Foundation, a New York policy analysis group financed by the industry.

"It comes with an economic penalty, but apparently Chavez is willing to pay that price," he said.

That economic penalty comes in the increased costs to transport crude from oil-rich Latin America to as far away as China and India, two fast-growing, energy-hungry giants that are eager to buy Venezuelan oil.

China is a 30-day tanker trip from Venezuela, while the US is just five days away and is well-equipped to refine the heavy, highly sulfurous oil that Venezuela produces.

Not a problem

Chavez's government, which has increasingly been sparring with the Bush administration over everything from the Iraq war to the Venezuelan leader's close ties to Cuba, is moving swiftly to forge energy ties with China.

Venezuela has said that this year it will double exports to China, to 300,000 barrels a day. Venezuela ships about 1.5 million barrels a day to the US.

Ramirez, in an interview with the daily newspaper Ultimas Noticias, played down the hurdles in replacing the US as a buyer.

"We're prepared to diversify our markets and will work toward that," he was quoted as saying. "The easiest thing is locating it. That will not be a problem."

Echoing Chavez's fears of a US attack on Venezuela, Ramirez said that Venezuela would respond by shutting off exports.

"We'll see then which of the two governments is able to manage this type of situation better," he said.

To consume more Venezuelan crude, China would have to configure more of its refineries to process Venezuela's particular type of crude.

Venezuela also would have to increase its fleet of tankers and build a pipeline to Colombia's Pacific coast, allowing easier shipping.

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