Oil and Gas

Venezuela Wants to Avoid US Oil Cutoff: Official


Halting Venezuelan oil exports to the United States is possible, but would be undesirable and costly, a top official in the OPEC nation said Tuesday, a day after oil prices rose on a threat by President Hugo Chavez.

Hugo Chavez
Howard Yanes

Curtailing supplies is always "feasible" but would hurt both nations' economies, said Bernard Mommer, a senior official at state-oil company PDVSA and top strategist in Chavez's drive to bring Venezuela's energy resources under government control.

Chavez warned over the weekend he could stop supplying Venezuela's oil to the United States, its top energy customer, over a legal dispute with U.S. oil giant Exxon Mobil .

Venezuela is the No. 4 oil exporter to the United States and the president's words sparked a rally that sent oil prices up almost 2 percent on Monday.

Asked on state television if it was "desirable" for Venezuela to cut off supplies to the United States, Mommer replied, "No. It would cost us money and would cost the other side money, too."

"The U.S. refineries specialize in Venezuelan oil, if there is no Venezuelan oil that causes a cost," Mommer said.

Mommer is a low-profile German-born mathematician who arrived in Venezuela in the 1970s and advised guerrilla movements that the country's oil fields were the key to revolution.

He is now the South American country's top oil strategist and masterminded the takeover of foreign-run oil projects, including one owned by Exxon, last year.

Industry analysts believe Chavez is unlikely to carry out his supply threat because it would slash revenue he uses to fund the social programs that underpin his popularity.

PDVSA faces a growing cash crunch due to heavy spending on programs that include road building and food distribution.

The company refines much of its oil through U.S. subsidiary Citgo, which provides a crucial outlet for its heavy crude oil, which can be difficult to sell on the open market.

Chavez made his threat in response to an Exxon legal offensive that won international court orders freezing $12 billion in its assets. The self-styled socialist revolutionary says the largest U.S. company is a proxy in what he calls Washington's "economic war" against Venezuela.