UPI Energy Watch

World oil prices drop; gas stays high

Since oil peaked at $100 per barrel, it's been falling and oil companies are under pressure to cut prices as well.

The cost of crude dropped last week, mostly on fear of the U.S. economy heading into recession, yet gas prices have not come down, the Dominion Post reported.

Prices fell on fears of slowing economic growth in the United States that could dampen demand one of the world's largest consumers of oil.

Oil prices peaked on Jan. 3 at $100 a barrel and most major oil companies increased their fuel prices and have not yet cut fuel prices back – even though oil prices dropped at the weekend.

The volatility of the oil market has kept some from dropping their prices.

Chavez says Venezuela will one day hold No. 1 reserves

Venezuelan President Hugo Chavez said his country will one day hold the largest oil reserves in the world.

He said that by the end of 2009, Venezuela will have 313 billion barrels of certified oil reserves, Indo-Asian News Service reported.

Chavez told lawmakers the country's oil reserves currently stand at 100 billion barrels, including 20 billion certified in the last two years. He said that's a large increase from the 76 billion barrels of reserves the country had when he took office in 1999.

With the projected 313 billion barrels in reserves, he said, Venezuela could "guarantee energy supply to many countries." It's already fifth-largest oil exporter in the world and a member of the Organization of Petroleum Exporting Countries.

Most of Venezuela's projected reserves come from the Orinoco belt, which is estimated to hold about 235 billion barrels of heavy crude, at least 20 percent of which is recoverable.

Though the high sulfur content of heavy crude makes it more expensive to refine, it should remain profitable as long as oil prices stay above $50 a barrel, state-owned oil company PDVSA predicted.

Turkmenistan, Iran battle over gas prices

The government of Turkmenistan has demanded an increase in the price of its gas exports to Iran.

According to Press TV, an Iranian delegation, headed by Deputy Oil Minister, Ali Kordan, visited Ashgabat to stress the importance of the two countries upholding their commitments stipulated in a 25-year agreement.

The Turkmen government has since cut off its gas deliveries to Iran citing technical problems and repairs to the installations. Turkmenistan has proposed the gas price should be increased to $140 per 1,000 cubic meters. Iran agrees with the price rise on condition that the Turkmen side agrees to increase the volume of its gas exports to Iran.

Iran and Turkmenistan signed an agreement last year to increase the volume of gas exports from eight to 14 billion cubic meters at a price of $75 per 1,000 cubic meters but Turkmenistan has called for annulment of the agreement.

The price debate has been going on since November and Iran, which imports about 5 percent of its gas from the Turkmen, is facing shortages after 13 days of being cutoff.

Turkmen foreign ministry insists the cutoff is technical and due to Tehran's failure to make the payments repair an maintenance had been put off while Iranian media reports that the shut-off is due to the price negotiations.

The cut has been blamed for serious gas shortages in northern and western Iran.

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Closing oil prices, Jan. 14, 3 p.m. London

Brent crude oil: $92.50

West Texas Intermediate crude oil: $93.97