Venezuela Plans on Shutting Fields to Boost Oil Output
(Bloomberg) -- Venezuela’s state-owned oil company is taking an unusual step to try and increase production: shut fields.
Starting in July, Petroleos de Venezuela SA will prioritize 13 fields in the Faja, a 55,000 square-kilometer (21,235 square-mile) strip north of the Orinoco River containing heavy crude oil that former president Hugo Chavez turned into the nation’s oil flagship project, according to a document seen by Bloomberg. The other 20 fields -- many producing less than 500 barrels a day -- will be considered inactive, the document showed.
PDVSA is struggling to turn around a slide in Venezuela’s oil production that has only steepened after the U.S. imposed sanctions on sales of naphtha, a compound needed to help tar-like crude from the Orinoco Belt move through pipelines. The restructuring follows PDVSA’s decision to turn oil upgraders into blending facilities in May. Output has fallen to 741,000 barrels a day, after bring further hobbled in March by a series of blackouts.
“This is an emergency plan as a result of the lack of naphtha and light crude,” said Antero Alvarado, managing partner of consultant Gas Energy Latin America. “This will affect total production output, as some fields will be shut temporarily.”
PDVSA declined to comment.
PDVSA plans to recycle naphtha to get the most use of supplies on hand, as it has struggled to buy more of the product on international markets since the sanctions were imposed. The company will concentrate efforts on the 13 most productive fields at the Orinoco Belt, among them those operated with Russia, China and U.S. partners.
According to the plan, four fields -- three of them operated jointly with international companies -- will start producing Diluted Crude Oil, which is a blend of heavy crude and naphtha. Nine others will focus on Merey 16, the country’s top exported grade.
The goal is to increase production from the region to 800,000 barrels a day, including 247,000 barrels of DCO and 552,000 barrels of Merey 16.
--With assistance from Lucia Kassai.
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