By OGJ editors
HOUSTON, Dec. 1 -- Production from Venezuela's marginal fields will surge within 3 years, predicts Wood Mackenzie Ltd., Edinburgh.
That conclusion came in a report entitled "Venezuela's new empresas mixtas set to boost output." Venezuela formed new joint venture companies (empresas mixtas, or mixed companies) with international oil companies after renegotiating contracts under which the companies were working (OGJ, Apr. 25, 2005, p. 48).
The mixed companies operate the assets, and state company Petroleos de Venezuela SA (PDVSA) takes a majority stake in each, typically 60% or larger.
After 2 years of reduced investment and production declines during "the painful process of rewriting the marginal-field contracts," a production boost is in prospect, WoodMac said.
"By 2009, oil production from the former marginal fields could have risen by 125,000 b/d or more, a 34% increase on today's levels," said Matthew Shaw, WoodMac Latin America senior analyst.
He noted these figures exclude production from seven marginal fields that were relinquished to PDVSA by participants choosing not to convert their contracts.
"In some cases, the return on investment arising from the contract conversion will actually increase—especially for the second-round marginal fields which had particularly tough fiscal terms—but the drop in working interest has seriously reduced the net present value of the assets for the third parties," Shaw said. "The overall decrease in their portfolio value is approximately $2.5 billion, a 43% drop".
The report also predicted long-term potential for many fields.
"The new contracts have extended the previous license terms by as much as 14 years, which should allow previously untapped oil reserves to be exploited, for instance by implementing water injection," Shaw said.
