Nov. 23 (Bloomberg) -- Venezuela will call on the Organization of Petroleum Exporting Countries to reduce oil output by 1 million barrels before year-end, Energy and Oil Minister Rafael Ramirez said.

The country, which pumps about 11 percent of the oil produced by the exporters’ cartel, also wants to ensure that all members are complying with the production cut of 1.5 million barrels a day that they agreed to Oct. 24, Ramirez said today in Caracas.

Venezuela will propose the additional reduction at a Nov. 29 meeting in Cairo that OPEC scheduled as oil prices declined. It is smaller than the 1.5 million barrels that Abu Dhabi said would be needed to keep oil prices high enough to support oilfield investment.

Crude oil for January delivery settled at $49.93 a barrel Nov. 21 on the New York Mercantile Exchange, 26 percent lower than Oct. 23, the day before the last OPEC meeting. The commodity touched a record $147.27 a barrel on July 11.

“We have to ensure this cut is implemented before the end of the year” to insure inventories do not continue to expand, Ramirez said. “Because of the reduction of demand, there exists an important oversupply in the market of at least more than 1 million barrels a day,” he said.

Ali Rodriguez, the South American country’s finance minister and the former president of OPEC, said today’s lower prices may cause future oil shortages.

Price Swing

“Because of the violent price crash, many projects that were in progress and others that were being proposed are frozen or slowed,” he said. “If low prices remain for a long period, surely there will be an oil shortage for lack of investment, and even having enough oil there may not be enough products for lack of investment in refineries.”

Venezuela’s proposed 2009 government budget assumes an average price of $60 a barrel for its benchmark oil basket, which last week sold for $40.68. It also assumes oil output of 3.6 million barrels a day, higher than the government’s estimate of about 3.3 million barrels a day.

Rodriguez said the budget may be revised in January or February with lower assumptions for oil prices and output.

Ramirez, the oil minister, declined to say what price would be needed to maintain investments. The country first wants to stabilize prices and OPEC can then consider whether the price is fair, he said.

Venezuela didn’t hedge its sales for next year to protect against low prices, Ramirez said. Mexico did, guarantying a price of about $70 for almost all the oil it will sell next year, that country’s finance minister, Agustin Carstens, said Nov. 13.

Venezuela doesn’t support speculating in the oil market and instead is setting up long-term supply contracts with dedicated customers to reduce price volatility, Ramirez said.

To contact the reporters on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net.

Last Updated: November 23, 2008 12:46 EST