PDVSA PLANS TO HIKE PRODUCTIVE CAPACITY

Venezuela's state oil company plans to jump its productive capacity by 117,000 b/d to 2.92 million b/d this year.

Petroleos de Venezuela also projects sizable increases for oil and gas reserves and plans record spending in 1992.

Meantime, Pdvsa is sounding a warning again about the Venezuelan government's excessive tax take amid debate within the company about spending priorities.

PRODUCTION, RESERVES

Pdvsa estimates 1992 liquids production will average 2.32 million b/d: 2.16 million b/d of crude, 121,000 b/d of natural gas liquids, and 37,000 b/d of condensate.

It's likely, however, production will exceed the official estimate. Pdvsa has considerable storage capacity in Venezuela and the Caribbean Sea and will use it to maintain export revenues at levels the government deems necessary.

Pdvsa's crude, condensate, and NGL production in 1991 averaged 2.474 million b/d. Liquids production in first half 1991 averaged 244 million b/d, up 225,000 b/d from 1990's average, and the highest level since 1976.

Pdvsa also projects an increase in crude oil reserves of 2.8 billion bbl to 62.72 billion bbl at yearend 1992. Natural gas reserves are expected to rise 4.5 tcf to 130.5 tcf by yearend.

OTHER OPERATIONS

Pdvsa expects total international sales, including revenues from foreign subsidiaries, to reach $24 billion in 1992.

It projects 1992 production of 1.87 million metric tons of Orimulsion, its extra heavy emulsion of crude, water, and a surfactant it sells as a boiler fuel in competition with coal. Drawing part of the volume from storage, Pdvsa expects this year to export 2.13 million tons of Orimulsion, broken out as 1.3 million tons to Europe, 550,000 tons to Japan, and 280,000 tons to North America.

Pdvsa refineries in Venezuela are expected to continue operating at near capacity of slightly more than 1 million b/d throughout the year.

SPENDING PLANS

Pdvsa's 1992 budget of $10.3 billion is up 40% from its 1991 budget. That breaks out to 32% capital spending and 48% operating expenses.

In June 1991, Pdvsa cut its budget for the year of $7.35 billion by about $491 million, and it isn't clear whether those cuts were restored.

Pdvsa late last month was authorized to borrow as much as $3.16 billion during 1992-97, the highest level of debt Pdvsa will have incurred.

Earlier in 1991, Pdvsa projected a need for about $8 billion in outside financing, mostly from international bond offerings.

Venezuela's ministries of finance and energy are basing estimates for the government's 1992 budget on average crude production for the year of 1.95 million b/d and an average export price, including crude oil and products, of $19/bbl.

Although still conservative, that compares with 1991 projections of 1.9 million b/d at $19/bbl, which proved too optimistic in light of sagging oil prices. Pdvsa's average export price in 1991 fell short of the $19/bbl target by about $2.50-3/bbl.

Pdvsa compensated for the lower than expected oil prices by hiking production and export volumes while most Iraqi and Kuwaiti supplies remained off the market.

Debate within Pdvsa spending priorities in the $48 billion 1991-96 budget continues to simmer.

Some in the state company question the desirability of massive outlays of $5.7 billion for petrochemicals and $2.5 billion for Orimulsion.

Although the two areas would generate export revenues, some Pdvsa officials prefer to see more focus on domestic refining ($10 billion), foreign investment-mainly refining and new acquisitions - ($4.5 billion), and exploration for light crudes ($1.7 billion), which they contend offer a better return.

TAX TAKE WOES

Pdvsa Pres. Andres Sosa Pietri predicts sharp declines in his company's tax payments the next 3 years.

That's because the government's net effective tax take, totaling about 82% of operating income, will squeeze the level of capital spending needed to sustain production and other areas of operations, he contends.

That doesn't include a tax of 120% of the price received from exports of crude and products, a holdover from prenationalization days when the government sought to guarantee a fair price to offset the effect of transfer pricing foreign concessionaires practiced among subsidiaries.

Pdvsa has drawn up legislation to phase out the 20% surcharge on exports, leaving the export tax at 100% of value by 1996.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.