PDVSA Collects US$1.07bn from 4 Orinoco Projects in 2005, Up 56%

Map of Venezuela - Orinoco Belt
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Venezuela's state oil firm PDVSA collected US$1.07bn from its participation in the four projects that produce extra-heavy oil in the Orinoco oil belt in 2005, up 56% from the amount collected in 2004, PDVSA said in a statement.

PDVSA also expects to receive an additional US$471mn in early February, the statement said.

The statement was issued in response to an article published in an unnamed local newspaper on January 20, which PDVSA said contained inaccurate figures.

The reason for the discrepancy could be that some of the money will not be collected until after the company delivers its 2004 and 2005 financial statements to the US Securities and Exchange Commission.

In some cases international financial institutions wait for the presentation of PDVSA financial statements before approving the payment of the participation that corresponds to each partner in the project, the statement said.

PDVSA is behind in reporting its financial statements since a 63-day strike in late 2002 and early 2003 that paralyzed the oil industry, although it has said reports for 2004 and 2005 will be ready soon.

The four extra-heavy crude projects are: Petrozuata, where PDVSA has a 49.9% interest; Cerro Negro, where PDVSA has a 41.7%; Sincor, where it holds 38%; and Ameriven, where it has 30%.

The projects produce a total 660,000 barrels a day (b/d) of crude, which is then upgraded to about 600,000b/d of synthetic crude.

Venezuela increased the royalty rate for these projects in late 2004 from 1% to 16.7% and energy and oil minister and PDVSA president Rafael Ramirez has said it could be increased to 30%.

The 1% royalty was designed in the 1990s as a fiscal incentive aimed at attracting investments in the projects, which require higher upfront investment than other E&P projects due to the upgrading required to transport the crude to refineries.

However, the government says operators can now afford higher royalties given high oil prices in recent years.

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