Top executives from state-owned Petróleos de Venezuela SA (PDVSA) came to New York May 19 looking to reassure nervous US investors that the company takes its role as a key short-haul supplier to US markets very seriously.
"The US is definitely the main destination of our oil production," PDVSA Pres. Alí Rodríguez Araque said to the Venezuelan American Association at a lunch at the Harvard Club in New York. "The US is the biggest consumer of oil in the Western Hemisphere, and Venezuela is the biggest and most reliable producer of oil. We are very close and very interdependent neighbors. So we need to work permanently to strengthen our energy partnership."
To that end, Rodríguez said that the country plans to increase crude production capacity to more than 5 million b/d by 2009 from 3.6 million b/d. The company will invest $27 billion; another $10 billion will be solicited from foreign investors.
PDVSA officials say they have largely recovered from a crippling 2-month strike that ended in February 2003. PDVSA's own oil production averages around 2.6 million b/d, with foreign investor concessions adding another 500,000 b/d for a total of 3.1 million b/d, they said. But analysts predict the company needs to court a lot more interest from multinationals than it is now getting to aggressively expand those numbers.
OPEC role
The country's production quota with the Organization of Petroleum Exporting Countries is now 2.7 million b/d. Rodríguez, like many others within the organization, including Saudi Arabia, have blamed the US's recent high gasoline prices on factors largely outside of OPEC's control.
He cited concerns about terrorism and market speculation as reasons contributing to higher crude prices. And in addition to those higher feedstock costs, US refiners have limited capacity and tight environmental rules to follow, which help drive up gasoline prices, he suggested.
But unlike his Saudi counterpart, Rodríguez did not offer to build new refineries in the US to help alleviate refinery constraints. PDVSA, through its Tulsa-based Citgo Petroleum Corp. downstream division, is the US's third largest refiner.
Rodríguez said in an interview with OGJ following his remarks that while building a refinery in the US "was not impossible," such an action faces formidable challenges. Even if it made good business sense, local opposition to new construction is a huge obstacle, he indicated.
In March, Citgo announced plans to expand distillation capacity at its Lake Charles, La., refinery by 105,000 b/d—the largest plant expansion at a US refinery in perhaps decades.
In addition to that expansion, Rodríguez suggested that a likely scenario for Citgo would be to expand another one of its US plants, although he declined to say when or if that would happen anytime in the near future.
