Chavez's Plan to Divert Power Could Push Oil Price to Over $100

The current power shortage in Venezuela may force President Hugo Chavez to divert electricity from the biggest refinery in Venezuela to alleviate the power needs of regions experiencing electricity shortages brought about by severe drought in 50 years.

Lack of rainfall causes the rapid decrease in water levels in most dams which provide at least 73% of the country's electricity requirements. Chavez may decide to tap a power plant at the 940,000 barrel-a-day Paraguana refining complex to supply electricity for public use, said Colin Fenton, CEO of the Boston-based oil research firm.

“He has to decide every single day what to do with Paraguana,” Fenton said today in an interview with Bloomberg Television in New York. In a related development, US geologists say Venezuela's oil reserves could yield more than 500 billion barrels of crude oil, almost double the proven oil reserves of Saudi Arabia.

The USGS team gave a mean estimate of 513bn barrels of "technically recoverable" oil in the Orinoco belt. Chris Schenk of the USGS said the estimate was based on oil recovery rates of 40% to 45%.

A Venezuela geologist however doubts the findings saying the recovery factor could not be higher than 25%of the estimated oil reserves which may not be economical to produce.

(original article appeared @ Digital Journal )