PLANS TO REVIVE OIL FIELDS IN VENEZUELA ON TRACK

The three operating units of Venezuela's state owned oil company Petroleos de Venezuela SA will begin receiving bids Feb. 28 from companies interested in operating 55 inactive oil fields in nine producing areas of Venezuela. Francisco Pradas, Pdvsa executive in charge of the program, said the company expects 88 companies or combines of foreign and domestic private companies to participate in the bidding.

Feb. 24, 1992

3 min read

Francisco Pradas, Pdvsa executive in charge of the program, said the company expects 88 companies or combines of foreign and domestic private companies to participate in the bidding.

The program, announced last year, aims to reactivate production in marginal oil fields. It will involve the first direct participation by private companies in Venezuela's oil production since nationalization in 1976 (OGJ, Aug. 19, 1991, p. 14).

PDVSA SPENDING TARGETED?

The decision to proceed with the politically sensitive program comes at a difficult time for Venezuela, still reeling from an attempted military coup Feb. 4. Venezuela's oil industry operations were not disrupted by the coup.

The minister of finance has announced the government will "revise" Pdvsa's medium term investment plan in the wake of the aborted coup. Oil industry officials worry that the government may seek to trim Pdvsa spending to find more funds for social programs to ease popular discontent with the current administration.

It is unlikely the main thrust of Pdvsa's $48 billion investment program covering exploration, production, refining, heavy oil, transportation, petrochemicals, and coal will be affected. However, some elements, notably spending on new productive capacity and heavy oil development, could be stretched out.

This year Pdvsa's budget is $10.3 billion, biggest in the history of the Venezuelan oil industry. Of the total, 52% is earmarked for capital outlays and 48% for operating expenses.

REACTIVATION PROGRAM

The nine operating agreements, to be signed later this year, covered by the reactivation program also will mark the first time private oil companies will be allowed to work as operators in Venezuela's upstream industry since nationalization.

Cristobol Colon, an ambitious $3 billion offshore gas development/liquefied natural gas export project, has participation by three private foreign companies, but its operator is Pdvsa unit Lagoven SA.

Lagoven, Corpoven SA, and Maraven SA will field the bids.

While details of the model contract provided to bidders are confidential, Pdvsa officials said payment to operators will relate directly to the volume of crude produced, and the contracts will be long term. Operators will be compensated for investments in the inactive fields, with operations carried out under the auspices of Venezuela's Ministry of Energy, which also oversees Pdvsa's domestic activities.

While operators will be allowed to drill appraisal and development wells in the fields they are assigned, they cannot drill beyond pay zones producing when the fields were operating without first negotiating new exploration/production contracts.

BID AREAS DETAILS

The areas up for bid are scattered throughout the country (see map, OGJ, Aug. 19, 1991, p. 15) in Quiriquire, Jusepin, Monagas, Pedernales, Guarico, and onshore and offshore Falcon regions.

Included are reserves of light, medium, and heavy crudes and condensates.

Pdvsa estimates cumulative production in the fields at 1.438 billion bbl, remaining probable reserves at 357 million bbl, and remaining possible reserves at 1.169 billion bbl.

The oldest area is a 1921 discovery, El Mene, 62 km from Maracaibo.

Included is an offshore field, La Vela off Falcon state, that was never fully developed. Pdvsa drilled 25 wells in the area as part of an exploration program that began in 1972 and found commercial hydrocarbons.

Some wells are still operating in the East Guarico area, where there are 20 fields discovered in the early 1940s.