Editorial Commentary / Opinion
Oliver L Campbell :
There is plenty interest in the Orinoco Belt
You would expect a journalist of Jeremy Morgan’s standing to check his facts more carefully. Writing an article in the Latin American Herald Tribune on July 29 entitled “Venezuela Halts Orinoco Oil Bids,” he says of the Orinoco Belt, “ It is considered a promising but still commercially risky prospect, not least because of the questionable quality of the oil there.” He then goes on to assert, “ The industry has long harbored doubts as to whether the Faja is worth developing because they wonder to what purpose the extra heavy crude could actually be put.”
Both these statements are untrue. Oil produced right now from the Orinoco Belt with an API of 8.5º is then either upgraded to 16º API or 32º API depending on the upgrader it is sent to. This makes the crude a commercial commodity which is suitable for refinery processing. The statement that the crude “would require so much post-production processing that even then it could only be used to fuel power stations” is just as false. The crude that is not upgraded is blended with the light Mesa oil to produce a crude of around 16º API. Both the upgraded and the blended crudes are sent to USA refineries and the slate of products gives PDVSA a good return.
The fact that Total, the leader in the Sincor consortium, was able to develop a plant that can upgrade an 8.5º API crude to one of 32º API is an extraordinary achievement which has been largely unrecognized. PDVSA has plans to build two more upgraders of similar characteristics as part of its current development of the Orinoco Belt. Far from questioning whether it is “worth developing,” the oil industry is lining up to participate. The fact the Carabobo Block bids are stymied is not for lack of interest on their part, but because PDVSA seeks to impose tougher conditions than the bidders are willing to accept. With the economic downturn, the fall in the demand for oil and current low prices, the bidders have dug in their heels and are waiting for PDVSA to make some concessions.
Oliver L Campbell , MBA, DipM, FCCA, ACMA, MCIM was born in El Callao in 1931 where his father worked in the gold mining industry. He spent the WWII years in England, returning to Venezuela in 1953 to work with Shell de Venezuela (CSV), later as Finance Coordinator at Petroleos de Venezuela (PDVSA). In 1982 he returned to the UK with his family and retired early in 2002. Petroleumworld does not necessarily share these views.
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Petroleumworld News 07/30/09
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