Ernesto J. Tovar/El Universal
: Interview/Ali Moshiri,
Chevron CEO for Africa and Latin America
"Windfall tax will be taken into account in the future"
"There will be early output of 50,000 bpd at Carabobo bloc
by September 2012," explained Ali Moshiri
State-run oil holding Petróleos de Venezuela (Pdvsa) has applied pressure to its minority partners in joint ventures to yield the first barrels of oil from the Orinoco Oil Belt in 2012. As a result, partner oil companies have "run" to get funds and start the development plans at the Belt.
Ali Moshiri, the President for Africa and Latin America of Chevron, an oil exploration and production company, told El Universal that plans have been already made for the early production at Carabobo bloc in the Orinoco Oil Belt. Next, though, a decision should be made on how to attain the goals.
What is the impact on Chevron of the new windfall tax?
Firstly, we must understand that in Chevron we look at the whole picture: capital expenses, tax terms and the project size. Each Chevron project in Venezuela should compete with others we have in our business portfolio, in other operations, elsewhere.
Based on that, not Chevron, but the Venezuelan government should decide on how much investment they want to arrive in Venezuela, or decide whether the projects here will continue being competitive versus other oil developments in the rest of the world. The decision to increase the windfall tax has its consequences, both good and bad. Still, we are not here to tell the government what is good and what is bad.
Which are the challenges faced by Chevron apropos this tax?
Remember that Pdvsa is the majority partner, with a 60% interest in joint ventures in each project. Most of the tax should be paid by Pdvsa. Therefore, an impact is made on both parties. The good thing is that the government gets the tax; the bad thing would be how future projects in Venezuela -instead of the present ones- will be viewed. We will not leave current projects or plans just because the tax rose. But for the future, whenever we are to make a decision on Venezuela, we will ponder on this profits tax and will ascertain whether it is competitive or not with other developments.
Did the surplus profits tax raise fears about the financial capacity for projects?
The new tax does not refer to new projects and that gives some room for discussion. But we should talk about government expectations on the return of our investment. That must be discussed.
What is the period of time to start getting a return?
Each project should be competitive, because if I go to my corporation and ask them to invest, first thing they will ask me is "how do these projects in Venezuela compared to others?" For this reason, they should be competitive. We always say that caution should be taken in the short term, but also in the long term. And this is a long-term project. We must discuss economic terms, and it should be good, not only for Chevron, but also for Pdvsa.
Will there be early output at the Orinoco Oil Belt by 2012?
Production is likely for next year. We will get 50,000 barrels per day of production at Carabobo bloc by September 2012. Technically speaking, we are ready, but there is the need for investments. There is the need to have investments right away, or we could even wait until next month, because we can speed up the operations. But a decision needs to be made on this. Minister of Energy and Petroleum Rafael Ramírez asked us whether Chevron could start this project, and we think we have the technology and human resources, like Pdvsa, to join efforts and undertake this project.
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Ernesto J. Tovar is
a Venezuelan Journalist and works as a reporter for El Universal, Venezuela's leading national newsdaily. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by El Universal, on June 27, 2011. The article was translated by Conchita Delgado. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 06/28/2011
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