PDVSA Creates New JVs for Oil Supplies

MARACAIBO (Dow Jones Newswires), June 19, 2008

Petroleos de Venezuela SA, or PdVSA, has created eight new joint-venture companies to manufacture oil industry supplies and equipment ranging from pipelines to semi-submersible platforms, and it's still looking for potential partners for some of them.

The newly created business entities include a new manufacturing plant for semi-submersible platforms and support ships, two plants to produce large-diameter and small-diameter pipelines, a gas turbine maker and another manufacturer of coated pipe, or OCTG, products to supply the local industry, Oil Minister Rafael Ramirez said late Wednesday in a presentation at the XIX Latin American Petroleum Show.

For the platform manufacturing company, Ramirez said a total investment of $774 million will be needed. PdVSA will likely take on an Iranian partner for this, he said, but gave no name. PdVSA would control the venture with a 60% stake. To establish all three pipe-producing ventures, PdVSA has estimated a total investment of $1.1 billion and plans also to keep a 60% stake in each.

A push to create new ventures follows a plan to rely less on purchases of foreign goods for the oil industry.

"We can't continue this trend of a typical oil country that buys everything overseas," Ramirez said.

PdVSA recently created a host of subsidiaries that in turn are expected to strike new deals with privately-owned partners that can help with technology and know-how.

Setting up a new gas turbine company is also part of the plan, the minister said. PdVSA has yet to find a partner for that venture that will require a $90 million investment.

Some of these companies have been previously announced, such as a $434 million oil rig manufacturing company in which PdVSA has partnered with CTPDC, a unit of the China National Petroleum Corp., or CNPC. PdVSA has also struck an agreement with Belarus to create a $23 million seismic service company, Ramirez said. An industrial wood processing plant is the only one of the eight new ventures that is 100% controlled by PdVSA.

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