Exclusive: Venezuela says crude, liquids output stable at 3.12 million bpd

Reuters News
Posted: Apr 08, 2013 2:08 PM
Exclusive: Venezuela says crude, liquids output stable at 3.12 million bpd

By Marianna Parraga

CARACAS (Reuters) - Venezuela's production of crude and natural gas liquids has stabilized at 3.12 million barrels per day after state oil company PDVSA halted a decline in output from the OPEC nation's second-most-productive region, Oil Minister Rafael Ramirez said in an interview on Monday.

Ramiriz told Reuters that PDVSA has found new reserves of 1 billion barrels of light crude in the eastern Monagas region, where production had been slowly but steadily declining since last year.

"Production is going up, particularly in the (central) Orinoco oil belt. The situation in the east has been solved and output there will continue to rise following the discovery we've made in El Furrial," he said in a telephone interview.

The new reserves found at El Furrial, in the north of Monagas state, were light crude that measured 42 on the American Petroleum Institute (API) scale, he added, and were in the process of being certified.

Production in northern Monagas slumped by about 12 percent last year to around 800,000 bpd, according to unofficial data from sources at companies working in the area.

PDVSA, the financial engine of the late President Hugo Chavez's self-styled leftist "revolution," contributed almost $44 billion to social welfare programs last year.

But despite high global oil prices, the company's profits slipped 6.1 percent to $4.2 billion, partly because it sold more fuel on the heavily subsidized domestic market.

Meanwhile, PDVSA's debts to service providers, which began accumulating after the 2008 financial crisis, leapt 35 percent last year to reach $16.5 billion.

Oil services giant Schlumberger Ltd warned last month that rates of payment by its Venezuelan customers had dropped sharply. It now says it has improved its ability to collect the money it is owed.

Ramirez said such big service companies could survive delays in payments more easily than their smaller counterparts.

"Schlumberger bills us for $2 billion a year," he said. "We know the small companies do not have the financial muscle to endure more than three months without being paid. But with the big companies, it's different. The relationship is dynamic."


Ramirez said the recent deal on paying down the debt to Schlumberger would be replicated with other service companies, with the goal of having the joint ventures fund themselves until the end of each year, when PDVSA would settle its accounts.

Venezuelans will vote on Sunday in a presidential election triggered by Chavez's death from cancer on March 5.

His preferred successor, acting President Nicolas Maduro, vows to continue his late boss's hardline socialism, while the opposition's Henrique Capriles offers a more business-friendly "Brazilian model" that mixes free markets with state spending on social projects.

In 2012 the Venezuelan government failed to achieve its goal of boosting oil production to 3.5 million bpd. This year it expects output to be 3.25 million bpd, compared with a total capacity of 3.5 million bpd.

Ramirez said that from this year PDVSA would begin carrying out more of the oilfield service activities that are currently performed on its behalf by big international providers such as Schlumberger, Baker Hughes and Halliburton.

"We are autonomous in many areas and now we would like to see the same thing in the service sector. We are opening up this market," Ramirez said. "This doesn't mean the trans-nationals are being pushed out. It means more competition."

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PDVSA ended last year with 381 rigs working in the country, many of them built in China. This year, Ramirez said, it has started importing machinery to provide more services at drill sites.

Ramirez said PDVSA was negotiating with some foreign partners for the companies to have their own rigs brought to Venezuela, speeding up the work. But he said the companies would have to agree to receive the fees set by the government.

"We're open to them bring their own drills. It is just a question of the tariffs," the minister added.

He said joint venture partners such as state oil company Petrovietnam, Italy's ENI and a Russian consortium headed by Rosneft had begun providing financing for the early production at their projects in the Orinoco belt.

The government hopes that a string of ambitious projects in the Orinoco will eventually add 2 million bpd of new output via investments of more than $80 billion.

But that will take years, with executives at some of the joint ventures saying work there has often been delayed by lack of infrastructure and delays in payments from PDVSA.

(Writing by Daniel Wallis; editing by John Wallace)