PDVSA to Invest US$56bn in 2006-2012 - Venezuela

Venezuela's state oil firm PDVSA has unveiled its US$56bn strategic plan for the period 2006-2012 aimed at boosting total national oil production by 75% to 5.85 million barrels a day (Mb/d) from 3.31Mb/d at present.

"This is the axis and the starting point," not only for Venezuela's development but for oil and "energy stability" on the planet, said Ramírez in presenting the plan to the media. Total investment in hydrocarbons will increase to US$10bn a year from about US$5bn/year at present, PDVSA said in a statement. "We will practically double the investment and we have to find a way so the majority of the benefit remains in the country, that's why we have put conditions such as national capital participation," Ramírez said.

Of the total US$56bn, the Venezuelan government will provide 70%, or US$39.2bn, and the rest will be invested by the private sector, the statement said. The plan calls for PDVSA to invest US$10bn to increase refining capacity by 844,000b/d, US$21.7bn in exploration and production and the rest in other areas including expanding the company's tanker fleet and its oil and gas pipeline network.

One of the most important aspects of the plan is the expanded role for PDVSA in all oil projects. According to Ramírez, PDVSA will take a 70% stake in all new exploration and production projects, including new projects in the Orinoco oil belt and mixed-capital joint ventures. "That's an average, in some projects we will have closer to the minimum 51% that the [hydrocarbons] law stipulates and in others we will seek 80%," he added.

Venezuela's government has ordered 32 existing operating agreements with private oil companies to migrate to joint ventures controlled by PDVSA by the end of the year, which should save PDVSA US$3bn/year in operating costs, the statement said.

Venezuela currently produces 2.19Mb/d of oil from PDVSA's own efforts, 498,000b/d from the operating agreements that are in the process of migrating to joint ventures with PDVSA, 618,000b/d from four Orinoco extra heavy crude upgrade projects, and 5,000b/d from shared profit projects. By 2012, PDVSA expects to be pumping 4.02Mb/d itself, joint ventures with private companies should be producing 460,000b/d, the four Orinoco projects 622,000b/d, and shared profit projects 121,000b/d. New Orinoco oil belt projects should be producing an additional 615,000b/d bringing the total output to 5.85Mb/d, the statement said.

Exploration activities will include the drilling of 196 wells that are expected to add 8.6 billion barrels (Bb) of reserves, while production drilling will include 3,320 wells in the Occidente (western) zone, 208 wells in the Centro-Sur (southern-central) zone and 1,473 wells in the Oriente (eastern) zone.

PDVSA is counting heavily on new Orinoco projects to boost production, Ramírez admitted. The Orinoco, or Faja as Venezuelans call it, has about 235-237Bb of extra heavy crude reserves. Ramírez said that it would take PDVSA 2.5 years to assess how much oil is really there. Venezuela is the world's fifth largest oil exporter.

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