PDVSA Petróleos de Venezuela : Resolution calling for oil production cut published in Official Gazette following OPEC agreement

Caracas.- The People's Power Ministry of Petroleum has issued a resolution calling for a reduction of Venezuelan oil production as of January 1, 2017 pursuant to the agreement reached at the 171st Meeting of the Conference of the Organization of Exporting Countries (OPEC), which was held on November 30th in
Vienna, Austria.

Resolution 195, published in Official Gazette No. 41063 dated December 29, 2016, provides that as of January 1st the state owned oil company Petróleos de Venezuela, S.A (PDVSA), its subsidiaries and joint ventures, shall reduce their production according to the parameters set by the Ministry in order to comply with the reduction of 95,000 barrels of crude oil per day agreed by OPEC.

It also provides that compliance shall be reported on an ongoing basis to the Ministry, as the governing body for hydrocarbons. Specifically, it assigns to the Office of the Vice Ministry of Hydrocarbons the execution, monitoring, follow-up and control of compliance with this resolution, in accordance with its powers to coordinate and produce the administrative records related to violations of this measure.

Aiming for market stability and price recovery, OPEC member countries agreed to reduce their combined output to 32.5 million barrels per day for six months as of January 1, 2017. This term is renewable depending upon prevailing conditions in the international oil market.

Following this agreement the Bolivarian Republic of Venezuela will reduce its production by 95,000 barrels per day from the reference production level, according to the Report of OPEC High Level Committee on the Algerian Agreement and the 171st Meeting of the Conference.

Under the Hydrocarbons Organic Law this production cut is mandatory for those who perform primary hydrocarbon activities in Venezuela.