By supplying oil to Syria, Venezuela may have exposed itself to the threat of sanctions. The ill health of President Hugo Chavez ahead of October 2012 elections also generates fresh uncertainty with regard to the outlook for the country's oil production. Huge heavy oil potential and now signs that gas self-sufficiency – and more – can be achieved, means that Venezuela is in a strong position, if it can keep the political situation under control.
The main trends and developments we highlight in the Venezuelan Oil and Gas sector are:
- In February 2012, Venezuelan energy minister and Petroleos de Venezuela (PdVSA) head Rafael Ramirez said that the company had established an investment plan worth US$236bn for the 2013 to 2015 period. In 2011, spending was US$10bn, well below a targeted US$18.4bn of investment. In 2012, Ramirez said he anticipated capital expenditure (capex) of US$15bn. PdVSA has vowed to end the year producing 3.5mn barrels per day (b/d) of oil, a rise of 0.5mn b/d on 2011 levels. The increase would come mainly from projects in the Orinoco oil belt, where the company plans to produce 470,000b/d.
- In December 2011, PdVSA signed a contract with Italy's Eni and Spain's Repsol-YPF to buy gas from the Perla field in the Gulf of Venezuela, the country's largest gas discovery. Eni and Repsol will each hold a 32.5% stake in the field when production begins, with PdVSA holding the remainder, according to an e-mailed statement from Repsol. The companies plan to produce an annualised 3.1bn cubic metres (bcm) in 2013 and eventually reach a maximum capacity of 12.4bcm in 2019, minister Rafael Ramirez said.
- Crude oil and liquids production in 2011 is thought to have changed little from the level recorded a year earlier, with BMI assuming an average of 2.41mn b/d. By 2016, there is scope for 3.25mn b/d of supply thanks to heavy oil schemes, with production capable of exceeding 4.00mn b/d by 2020. In terms of demand, the estimated 0.79mn b/d of consumption in 2011 is set to reach 0.95mn b/d by 2021. Oil export potential will therefore climb from 1.62mn b/d in 2011, through 2.39mn b/d in 2016, to almost 3.10mn b/d by 2021.
- Oil production from joint venture (JV) projects between PdVSA and China National Petroleum Corporation (CNPC) in Venezuela will reach 1.1mn b/d by 2014, according to Ramírez. He said that this will be 10 times greater than current output of 112,000b/d. President Chavez has signed a contract to secure a US$4bn loan from the China Development Bank to boost the oil output, Ramírez added.
- Thanks largely to the Perla gas sales agreement mentioned above, Venezuela should see production reach 33bcm by 2016, climbing further to 44bcm by 2021. While there is scope for net export capability, we are assuming domestic demand will consume all of the available gas, but that Venezuela will no longer be a net gas importer beyond 2013.
- By 2016, Venezuela's oil and gas exports are set to yield some US$81.4bn. This will rise towards US$105.5bn by 2021 as oil export volumes grow on the back of heavy oil schemes. At the time of writing we assume an OPEC basket oil price for 2012 of US$99.38/bbl, falling to US$97.23/bbl in 2013. Global GDP in 2012 is forecast at 3.2%, up from an assumed 3.1% in 2011, reflecting slower growth in China and uncertainty with regard to the eurozone debt situation. For 2013, growth is estimated at 3.7%.
Click for Report details:Venezuela Oil And Gas Report Q2 2012