State oil company PDVSA would need an investment of $ 58 billion to return to levels it produced in 1998, Reuters reports, citing a document seen by the news agency.
Venezuelan state-owned oil company PDVSA would need an investment of $ 58 billion to revive its crude production to 1998 levels before ex-President Hugo Chavez came to power, or 3.4 million barrels per day (bpj), a document seen by the Reuters news agency shows.
In the February 2021 document titled “Investment Opportunities,” the planning and engineering division of Petroleos de Venezuela said it was seeking capital investments from Venezuelan and foreign partners, mainly to recover and modernize infrastructure. of oil production “under new business models”.
The main new PDVSA partnership model detailed in the document was the use of Production Service Agreements (ASPs).
Under these agreements, contractors would finance 100% of operations in the oilfields and in return receive a portion of the project’s free cash flow as payment. The Venezuelan state would remain the full owner of the fields and associated infrastructure.
The crisis-stricken South American nation produced just 578,000 bpd of crude in March, according to figures the country provided to the Organization of the Petroleum Exporting Countries (OPEC), well below the 2021 target set in the 1.28 million bpd document.
The proposal comes as President Nicolas Maduro seeks to reestablish ties with the private sector to attract investment to rebuild the collapsing economy of the OPEC nation, in a reversal of tightening state control under the socialist model of Chavez.
According to the document, the three main objectives of the Venezuelan oil industry are to “stabilize and recover the production of crude oil and gas”, to “restore the reliability, safety and quality of operations” and “to supply fully the internal market in fuels ”.
Washington has imposed sanctions on PDVSA in an attempt to depose Maduro, whom he calls dictator. Venezuela’s socialist government accused the United States of seeking to control its oil resources.
A tightening of sanctions in 2019 under former US President Donald Trump made it difficult for the company to attract investment, given the risks of its partners themselves being blacklisted.
Moreover, even state-owned companies in countries that are Maduro’s staunch allies, such as Russia and China, are reluctant to step up cooperation with PDVSA after years of corruption and operational inefficiency that have clouded the ambitious goals of the projects.
In total, PDVSA identified a total of 152 “opportunities” requiring $ 77.6 billion in investment, including crude and gas production, intermediate operations such as transportation and storage, and refining operations. and marketing.
The lion’s share of the investment required, over $ 69 billion, would go to crude oil and gas infrastructure.
Of that, $ 58 billion is needed to bring crude production from joint ventures and PDVSA’s own oil fields back to 1998 levels, while an additional $ 11.3 billion would go to onshore and offshore gas fields.
PDVSA also estimated that $ 7.65 billion is needed to revive pipelines, oilfield gas injection projects, terminals and refineries that are idle or underperforming due to lack of interview.
Neither PDVSA nor Venezuela’s petroleum ministry responded to requests for comment.
Venezuela is home to some of the largest crude reserves on the planet, but its oil industry is performing well below capacity after years of underinvestment.
The country’s opposition has drawn up its own plan to restructure the industry and attract investment following a possible change of government.
A technical committee working with the opposition last year set less optimistic goals: the country would need around $ 98 billion to increase production to 2.2 million bpd.
In addition to production service agreements (ASPs), the PDVSA document also announced investment opportunities in its joint ventures with private partners, although it did not specify what, if any, would change in the business model of these projects.
Venezuelan law requires PDVSA to own a controlling interest in all joint ventures.