The Hindu Business Line : Era of cheap oil over: Venezuela company official

The era of cheap oil is over and prices will not go back to $30-40 a barrel again, according to Mr Luis F. Vierma, Vice-President (E&P) of Petroleos De Venezuela SA (PDVSA), Venezuela's national oil company.

"Oil prices will stay where they are now and may head to $60 in the near future," he said on the sidelines of the ongoing Petrotech 2007 international oil and gas conference.

Mr Vierma's statement comes in the backdrop of a 15 per cent drop in global oil prices to around $52 in the last three weeks.

Venezuela, which produces 3.1 million barrels of oil a day, is an important member of the OPEC and has been pushing for immediate action to stem the slide in oil prices.

PDVSA's stance is in contrast to that of Nigeria and Saudi Arabia, which have been non-committal on the subject of fairness or otherwise of the prevailing prices.

Mr Edmund Daukoru, Nigeria's Oil Minister, and Mr Ali al-Naimi, his Saudi Arabian counterpart, who are participating in Petrotech 2007, were at their diplomatic best, stating that markets determined prices and that they had no role in it.

Capacity bottleneck

In a presentation on `Upstream business in the next decade,' Mr Vierma said that the three major challenges facing the global oil industry are inadequate refining capacity, scarcity of rigs and shortage of skilled human resources.

"We don't have enough refineries now and there are not going to be enough refineries in future to take care of all the oil that's produced."

He added that refiners will find it difficult to meet the expected surge in gasoline demand in North and South America alone in the near future.

He also said that the share of heavy oil - of the kind found in Venezuela and Canada - in the global pie will go up even as that of light and medium grade oil will drop due to their falling production.

Refineries that can handle the heavy crude are in great number, and this will pose a problem.