Venezuela said it planned to increase its heavy crude production to 1.6 million barrels a day by 2010. That deadline passed nine years ago. Before U.S. sanctions took effect this January, the country was only producing 1.1 million barrels a day in total, according to OPEC. Here's a flashback to PDVSA's optimistic plans long ago, part of a series of articles I wrote in 2005 for the Daily Journal in Caracas and am re-publishing here.
PDVSA to boost output
By Jens Erik Gould
June 28, 2005
MARACAIBO - Luis Vierma, vice president of production and exploration for state-run Petroleos de Venezuela (PDVSA), said on Tuesday that heavy crude production in Venezuela would rise by 1 million barrels per day (bpd) by the year 2010.
Part of the increase would come from a heavy crude project in San Cristobal, which Vierma said would be producing 400,000 bpd by 2008. PDVSA President Rafael Ramirez would soon outline the company's strategy for developing the Faja del Orinoco as well as announce new projects accounting for the rest of the production increase, Vierma said.
Vierma made the remarks in a keynote address at the opening day of the Latin American Petroleum Show in Maracaibo. Ramirez - who doubles as the energy and petroleum minister - cancelled his appearance at the event, apparently due to the Petrocaribe meeting in Puerto la Cruz.
The PDVSA vice president told reporters after his speech that Indian Oil company was evaluating a possible joint venture in the San Cristobal project. He added that the deal with India's state-run oil company was only a possibility at this point, since the Indian company has voiced a preference for lighter crude fields. "The Hindus have their preferences," he said.
He said PDVSA was open to discussing partnerships with other foreign companies as well, but offered assurances that the company also had the technological expertise to launch the project alone. "We are open to any type of negotiation," he said.
According to Vierma, PDVSA has already drilled a series of wells at the San Cristobal project, which is north of Cerro Negro in the Faja. The state oil company will either create a blend and sell the crude at 16 API, or send the heavy crude to refineries that are still in the planning stages, he said.
Vierma said PDVSA was in the process of determining the cost of the San Cristobal project, and added that the wells were "relatively inexpensive." Current heavy crude production is estimated at 600,000 bpd.
The vice president also praised the recent construction of the first Venezuelan-made platform, which was intended for use by ConocoPhillips in Corocoro in the Gulf of Paria.
Regarding the Rafael Urdaneta project in Paraguana, Vierma said PDVSA would receive bids from 30 companies for exploration in September. The bidding would be carried out "without a day of delay," he said, even though analysts have previously expected bidding to end in July. The project consists of 29 blocks in the Gulf of Venezuela and 11 in Falcon.
"Massive" maintenance plan
PDVSA will also launch a "massive well maintenance program" in Lake Maracaibo, which has over 10,000 wells, Vierma said. The project will include improvements to the mechanical structure of wells and to gas injection plants, some of which are 50 years old.
The two main goals of the project were to save natural gas and to increase crude production, he said.
Critics have said there is a severe lack of upkeep and investment in the area. Valeria Luti, director of finances for Convalsa construction company in Zulia state, told The Daily Journal that the lack of maintenance of wells in Lake Maracaibo was responsible for falling production levels.
She said that the decrease in PDVSA investment had caused many service companies in the area to close up shop, although Convalsa revenue had improved slightly in 2005.
PDVSA aims to launch the maintenance project in phases and anticipates that it will last five to six years, he said. The cost of the project is currently being evaluated. "We don't want to consider (sources of financing) is if it is not necessary," he said.
In other news, ChevronTexaco's Latin American president Ali Moshiri told reporters that the company would present a plan in January 2006 to open heavy crude production in the Faja del Orinoco. Moshiri said the company would share the venture with the Spanish company Repsol and PDVSA.
JENS ERIK GOULD
Jens Erik Gould is a political, business and entertainment writer and editor who has reported from a dozen countries for media outlets including The New York Times, National Public Radio and Bloomberg News.