Tribune : Venezuela dreams
of 5.8 million barrel of oil days
was just a year ago that Venezuela’s energy minister,
Rafael Ramírez, pledged that his country would be getting
billions of new investment dollars from China and that oil
production “by 2012 will be at 5.8 million barrels per
But now in the wake of the Orinoco project nationalizations, it’s clear
that PDVSA will be lucky to even hold production steady at less than half the
2012 target levels. The problems: PDVSA lacks funding for exploration and production,
and it faces a shortage of qualified personnel. Executives and engineers who
supported the 2002 strike and the attempted coup against Venezuela’s
president Hugo Chávez are blacklisted from PDVSA, and others have opted
for jobs in the higher-paying private sector. The personnel problems extend
down to the drilling rig. In July, news reports surfaced that some operators
of the 46 newly nationalized rigs were reluctant to join PDVSA. The company
denied reports of strikes at the rigs, but admitted to labor “difficulties.” Then
there are the problems with getting foreign companies to supply the rigs themselves,
which as PDVSA’s Luis Vierma explained to the National Assembly, will
cut the country’s rig count by nearly 40 percent to just 120 rigs. This
decline would be a major setback for any country but is particularly daunting
for Venezuela, where oil production drops roughly 25 percent per year unless
new wells are developed.
to that the loss of three major investors – Exxon Mobil,
ConocoPhillips, and PetroCanada, all of whom chose to pull
out of Venezuela rather than accept PDVSA’s terms to
continue Orinoco operations under state-dominated joint ventures – and
it’s increasingly clear that Chávez’s Bolivarian
revolution could face a cash crunch very soon. Indeed, although
PDVSA was able to raise money this year, thanks to a multi-billion-dollar
bond issue, the company cannot continue to rely on debt. As
Standard & Poor’s put it in a March report: “PDVSA’s
financial performance will weaken during the next couple of
years because of higher debt leverage.”
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note: This commentary was originally published by EnergyTribune,
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Petroleumworld News 08/17/07
Copyright© 2007 Energy
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