Venezuela: The new Saudi
Arabia
Petroleumworld
CARACAS
Petroleumworld.com 01 12 06
Researched
by Industrialinfo.com (Industrial Information Resources, Incorporated;
Houston, Texas). Venezuela's state-owned petroleum company, PDVSA,
has announced plans to reach crude oil production levels of 5.8
million barrels per day by 2012 and 7.5 million barrels per day
by 2020. PDVSA also wants to invest $3 billion in expanding its
refining capacity. It will form strategic alliances with numerous
countries in order to use refineries located in the Caribbean
and South America. PDVSA will invest $56 billion between 2005
and 2012 to accomplish its goals. Venezuela will pay 85% of this
investment with its own resources, and the remaining 15% will
come from private entities.
Venezuelan President Hugo Chavez has divided this expansion project
into two stages. The first phase will occur between 2005 and 2012,
and the second phase between 2012 and 2030.
PDVSA
is hoping to turn Venezuela into the country with the most crude
oil reserves in the world, surpassing even Saudi Arabia. Over
the last few years, the Venezuelan petroleum industry has been
trying to increase its crude oil production since it is estimated
that Venezuela's crude oil reserves could be greater than 77 billion
barrels.
Venezuela
initially attempted to become the world's oil superpower in the
1990s, but the plan was abandoned in 1998 due to a fall in oil
prices. However, lately the high price of oil, uncertainty about
worldwide oil reserves, increases in the demand for energy, and
recent initiatives to increase regional integration in South America
have convinced Venezuela that now is the time to undertake an
aggressive expansion project.
Boost
in Production
During
the first six months of 2005, Venezuela's oil production reached
3,312,000 barrels per day. Of this, 2,291,000 barrels were supplied
by the Venezuelan oil company and 352,000 barrels were supplied
by private companies. Luis Vierma, PDVSA's Vice President of Exploration
and Production, has declared that PDVSA hopes to increase production
to as much as 4,019,000 barrels per day by 2012, as well as generate
615,000 additional barrels per day of new synthetic crude oil
products in the Franja de Orinoco region. Vierma also stated that,
in order to achieve these goals, PDVSA will emphasize the recovery
of oil from known fields, accelerate exploration for natural gas
within Venezuela, and begin numerous new projects in Franja de
Orinoco.
Moreover,
Vierma indicated that there will be a need to construct, adapt
and improve Venezuela's entire petroleum infrastructure, including
refineries, terminals, oil pipelines, and tanks. The effort will
be focused in the eastern portion of the country where PDVSA estimates
it can increase oil production by 6.6 million barrels per day.
PDVSA will construct 21 tanks, three new ports for oil transport,
and 650 additional kilometers of pipelines in this eastern region.
It is estimated that PDVSA will need to spend $40.9 billion to
support these exploration and production activities.
Eulogio
del Pino, a director of PDVSA, stated that PDVSA will increase
natural gas production from 6.3 billion cubic feet to 11.5 billion
cubic feet. The increases will be distributed as follows: in Zulia
production will increase from 1.1 billion cubic feet to 1.4 billion
cubic feet, in Yucal Placer, in the center of the country, it
will increase from 1 billion cubic feet to 3 billion cubic feet,
and in Anaco the increase will be from 1.7 billion cubic feet
to 2.8 billion cubic feet. Moreover, the production of natural
gas of the Proyecto Mariscal Sucre (currently at about 1.2 billion
cubic feet of production) and the Plataforma Deltana (currently
at 1 billion cubic feet of production) will also be increased.
New
Projects
Alejandro
Granado, PDVSA's Vice President of Refining, explained that Venezuela's
petroleum industry will concentrate on increasing crude oil processing
capacity through the expansion of existing refineries and investments
in plants in the Caribbean and South America.
Granado
said PDVSA is considering spending $10.5 billion to build three
new Venezuelan refineries in Cabruta, Caripito, and Barinas. If
they are built, processing capacity in Venezuela will increase
to 700,000 barrels per day. Moreover, investments in four of PDVSA's
existing Venezuelan refineries could result in an increase of
processing of heavy and extra heavy crude oil by 62%. These investments
would most affect the Paraguana refinery.
Granado
also explained that PDVSA has the intention to reach an international
processing capacity of 2.3 million barrels per day by 2012.
Relations
with other countries
Granado
said that the governments of Venezuela and Cuba are working together
to reactivate the Cienfuegos refinery, which will require an estimated
$44 million investment. Cienfuegos has a processing capacity of
70,000 barrels per day, which is to be used to meet the local
fuel demand.
Venezuela
and Jamaica are working on a project to expand the capacity of
the Kingston refinery to up to 50,000 barrels per day. They are
planning to invest $197 million between 2006 and 2008 for this
project.
Venezuela
is also considering the possibility of processing 50,000 barrels
per day from the La Franja de Orinoco region at the La Teja refinery
in Uruguay. This project could be ready by 2011 and would require
approximately $600 million in investment.
Granado
also announced that Venezuela would construct the San Jose Abreue
Lima refinery in Brazil through its alliance with Petrobras. This
$3 billion investment is expected in 2011, and the refinery is
expected to have a processing capacity of 200,000 barrels per
day of crude oil coming from La Franja de Orinoco and Brazilian
oil fields.
There
is also talk of possibly refining Venezuela's crude oil in the
Cartagena refinery in Colombia. While at the same time, PDVSA
also wants to expand its market share in Chile and Peru.
Increase
in PDVSA's petroleum transport fleet
Asdrubal
Chavez, PDVSA's internal director, announced that by 2012 PDVSA
will have 58 tankers in its fleet. These tankers will carry 45%
of the petroleum exported by Venezuela.
The
building and maintenance of ships will occur via strategic alliances
with Argentina, Brazil, China, and Spain. PDVSA will spend an
estimated $2.2 billion for the construction of 42 new oil tankers.
Other
Projects
President
Chavez has also announced the Petroandina Initiative, which includes
the building of an oil pipeline from Venezuela to the Pacific
Ocean. The pipeline will traverse Colombia. This will allow Venezuela
to gain greater access to Asian Markets by making oil transport
faster and lowering freight costs.
Asdrubal
said that PDVSA will use its plants in Aruba, Bonaire, and Isla
in Curazao as distribution centers to distant markets such as
China and India. These centers have deep-water terminals that
are compatible with tankers that have the capacity of holding
2 million barrels of oil.
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Petroleumworld
01/11/06
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