Petroleos de Venezuela SA (PDVSA) is a reliable supplier of oil and petroleum products to the US, and this market a good opportunity for the $43 billion it needs to increase its oil production to 5.1 million b/d by 2008 from a current annual average of 3 million b/d, said PDVSA Pres. Alí Rodríguez Araque May 5 in Houston.
"We estimate that around 46% of this amount will be covered by the national and international private sector," said Rodríguez at a press conference in a Houston hotel some miles from where the annual Offshore Technology Conference opened its 4-day run May 5. A meeting with oilmen at the hotel was scheduled after the press conference at which Rodríguez, along with other PDVSA and government officials, claimed that oil and gas operations in Venezuela have virtually completely recovered from a crippling 63-day general strike that ended in February.
"The corporation has demonstrated an impressive capacity for recovery, to the extent that our oil production today is back at a completely normal level of more than 3 million b/d," said Rodríguez. "We have completed results on an extraordinary discovery of a new light oil and natural gas deposit, with characteristics that make it rank as 'giant.'"
As a founding member of the Organization of Petroleum Exporting Countries, Venezuela will comply with its new production quota of "almost 3 million b/d," said Rodríguez. However, he said, it's not always possible for a member country to match exactly its production quota, which is viewed as an annual average production target.
Strike recovery concerns
Downstream, Rodríguez said, "We are processing more than 1 million b/d. All of our maritime terminals are operational and have been amply certified by the relevant domestic and international organizations."
Rodríguez acknowledged, without elaborating, that "two regrettable accidents occurred recently. Although undesirable, these accidents may occur due to the countless variables involved in oil activities."
Critics claim accidents have occurred at refinery and tanker-loading facilities as a result of PDVSA having fired thousands of experienced workers and replaced them with inexperienced ones as well as soldiers.
After the strike, PDVSA ramped up its production so fast that, at one point, it had to curtail production until the company's tanker-loading operations could catch up, said Luis Marín, director of PDVSA. This was done despite a great deal of sabotage by striking PDVSA workers at virtually all of the company's facilities, he said. Later, however, Marín said striking workers kept some wells producing to guard against water encroachment in PDVSA's mature western division. "At least they were responsible in that," he said.
PDVSA officials claimed there was no major damage to producing reservoirs as a result of the strike. To the contrary, Marín said some fields benefited from the shutdown by rebuilding reservoir pressures.
Meanwhile, as a result of the general strike, Rodríguez said, "approximately 18,000 employees have left the company, but not because of mass dismissals but rather as a consequence of a mass abandonment of their posts."
However, in an earlier interview with OGJ, Rodríguez said at least 7,000 of then 12,300 dismissals of PDVSA workers were justified as cost-cutting measures to trim back a 33,000-member workforce (OGJ Online, Feb. 28, 2003).
Venezuelan President Hugo Chávez has called for criminal prosecution of some of the former PDVSA employees who participated in the general strike aimed at toppling him from power.
Three-step program
Although acknowledging PDVSA's prestrike reputation, Rodríguez said, though an interpreter, that he and other top executives have a new three-step program in place to make the firm even more productive and profitable in the near future. Those steps include:
- Disposing of the company's "inefficient" businesses, divisions, or operations.
- Improving those operations that can be improved.
- "Optimizing" the best of the company's operations "to become one of the best oil companies in the world."
As part of that program, PDVSA has been divided into two firms along its eastern and western operations, with each encompassing the full range of upstream and downstream activity. That move was contemplated even before the general strike "to guarantee the management of the company," said Rodríguez.
"Because the energy market is changing, we have to align our business activities with those changes," he said. At one time, Rodriguez said, PDVSA was "three companies whose performances were positive. Then it was integrated into one that was not so positive. Now it is two companies, based on the realities of the industry, the country, and the company."
Meanwhile, Venezuela's government is "working hard to establish the legal framework" to protect those foreign investors who want to invest in the country's energy sector, said Luis Vierma, Venezuela's deputy minister of hydrocarbons.
"Before, it was not possible for any investor legally to have even 1% [ownership] of [Venezuela's] upstream or downstream operations, except in heavy oil," said Luis Dávilla, executive advisor of PDVSA. "The big change is that it is now possible to acquire up to 49% interest in upstream operations," including all types of oil, he said.
Both local and international investors can obtain up to 100% ownership of natural gas projects in Venezuela, while the country's downstream operations also are in the process of opening to full equity investments by outsiders.
Venezuela is preparing for "a big round of bidding" for offshore properties by the end of next year, said Vierma. Bidding rounds also are planned for onshore and Lake Maracaibo, he said.
