Venezuela '06 Foreign Oil Investment Plunges; Exploration Up

CARACAS Feb.7, 2007 (Dow Jones Newswires)

Foreign oil investment in Venezuela fell 55% in 2006 compared with the year-ago period, indicating that firms halted spending amid contract uncertainty.

Figures included in President Hugo Chavez's year-end message to Congress put foreign oil investment at 35 billion bolivars ($16.3 million) last year, down from VEB76 billion ($35 million) in 2005.

Last year Venezuela took majority control of 32 oil fields that were previously operated by outside firms. Venezuela still has to finalize some contract details for the new joint-venture companies, such as payment for oil sales to the state-run Petroleos de Venezuela S.A. This has forced many private firms to delay needed field maintenance programs.

Venezuela's foreign investment cycle reached a peak at the start of the decade as oil majors invested heavily in multi-billion-dollar extra-heavy crude projects and increasing output at the 32 "mature" oil fields.

In total, foreign oil companies and a handful of privately-owned domestic oil firms have invested $26 billion in Venezuela since the country opened the industry to private investment in the early 1990s.

Exploration Spending Rises

While foreigners trimmed their budgets last year, state-run PdVSA appeared to be busy with exploration work. The 318-page message to Congress showed a 24% rise in exploration spending to 548 billion bolivars ($255 million) last year from 415 billion ($193 million) in 2005.

Venezuela completed 15 exploration wells last year, up from 10 in 2005. The number of oil production wells completed last year shot up to 450 from 182 in 2005.

Venezuela's booked oil reserves rose to 87.6 billion barrels in 2006 from 80 billion in 2005. Venezuela is actively exploring for oil in the Orinoco river basin, and expects to book around 235 billion additional barrels of oil by the end of 2008.

Natural gas reserves rose to 167 trillion cubic feet last year from 151 trillion cubic feet at the end of 2005. Venezuela has been booking additional gas reserves from the offshore Deltana region, as wells as in central Venezuela.

Venezuela claims it produced an average of 3.2 million barrels a day last year, compared with industry estimates of 2.5 million b/d.

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