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PW: FT's question PDVSA's ability to deliver




The Financial Times' Venezuela correspondent in FT beyondbrics blog hammers in what everybody is saying, is PDVSA able to deliver what it promises or it is just B.S.

 

PDVSA: big talks but can it deliver?

Although the exact level of Venezuela's oil production has been shrouded in mystery for almost a decade now, there is no doubt about the OPEC nation's intentions to increase exports to China.

Whether they will equal exports to the US within three years, however, as energy minister Rafael Ramirez (pictured right) on Thursday said it would , is of course another matter – if state oil company PDVSA's consistent failure to meet production targets in the past is anything to go by.

Still, the trend is clear enough. According to the latest data from by the US Energy Information Administration, Venezuela's exports to the US, long its biggest customer, are plumbing nine-year lows .

The EIA's records show that the US imported just 764,000 barrels per day (bpd) of Venezuelan crude oil and refined products in November – not quite as low as the 613,000 bpd the US imported in February 2003, at the end of a strike that crippled Venezuela's oil industry.

But it's about half what the US was importing in 1999, the year that Venezuela's anti-imperialist president, Hugo Chávez, came to power.

Leaving aside all the production problems that PDVSA gas been grappling with in recent years – not least because increasing amounts of its resources have been funneled into Chávez's social programmes , rather than being reinvested in its core business – this is also because Venezuela has been diversifying its clientele.

China has been the biggest beneficiary by far, largely because it has pledged some $32bn in loans to Venezuela, a portion of which is repaid with shipments of oil .

On Thursday, Ramírez said that Venezuela was currently exporting 460,000 bpd to China, and that by 2015 this would reach 1m bpd. He even seemed to claim that China paid a better price than other customers such as the US, despite the greater distances involved.

But if his forecasts for what Venezuela will be exporting to China in three years from now are as suspect as his predictions for the 39 per cent jump in production in the Orinoco Belt by the end of the year, from 1.15m bpd to 1.6m bpd, then they should be taken with a pinch of salt.

“You really believe him?” one senior executive at a foreign oil company operating in the Orinoco Belt recently asked beyondbrics, referring to Ramírez's recent production predictions for the Orinoco this year.

Still, if Venezuela's exports to the US continue declining at the rate they have been, perhaps it won't be so difficult for exports to China to equal them within three years after all.

- By Benedict Mander / The Financial Times / February 9, 2012 9:30 pm


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Benedict Mander is the FT's Venezuela and Caribbean correspondent, based in Caracas since 2007. He previously covered the Southern Cone for the FT from Buenos Aires, having joined the paper in Mexico in 2005. Petroleumworld not necessarily share these views.

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Petroleumworld News 02/10/2011

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