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PDVSA: Low production will not rise with 2004-planned investment

By Mariana Parraga, El Universal

Although oil authorities have announced that the amount of money to be invested in the state oil firm Petróleos de Venezuela (Pdvsa) will grow by 130 percent in 2004, experts argue that not even using the whole $5.022 billion that have been budgeted will output increase. Last week, Domingo Maza Zavala, a member of the directors' board of the Central Bank of Venezuela, predicted a fall in the country's oil potential in the future. Just days later, Ignacio Layrisse, former director of production of Pdvsa, said that the company barely has any chance to increase the 2.6 million barrels of crude it has been producing lately. $5.022 billion are not enough to rise production to 3.41 million barrels per day, as estimated in the 2004 national budget, oil expert Ignacio Layrisse said.

Layrisse had said in early 2002, when the costs and spending budget of Pdvsa was cut by 40 percent, that production would fall from 3,23 million to 2.6 million barrels per day, while output capacity would decline from 3.9 million to 3.4 million barrels per day.

One year after the general strike that curbed production to as low levels as 25,000 barrels per day, the oil contribution to the gross domestic product has fallen from 30 percent to 23 percent, according to figures of the Central Bank of Venezuela. Alarm has spread inside and outside of the industry.

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Trying to explain how much investment Pdvsa needs in order to recover its exploitation levels, Layrisse said that of the estimated 2.6 million barrels per day produced today, only 1.6 million barrels are exploited by Pdvsa; the rest come from private companies.

In November 2002, the production of the state company was at 2.4 million barrels per day. "It is a decline of 900,000 barrels per day in Venezuela's production, of which Pdvsa has lost 800,000 barrels per day," he added. Instead of increasing their production by 140,000 barrels per day, operating agreements have slightly reduced it. However, the strategic partnerships that operate in the Orinoco oil belt have remained at 500,000 barrels per day. Considering all this, Layrisse concludes that $5.022 billion are not enough to rise production to 3.41 million barrels per day, as estimated in the 2004 national budget. "In 2003, before the cuts, $8.1 billion had been estimated for exploitation and production, with exploitation increasing by barely 100,000 barrels per day. Now a similar amount is needed only to keep that (level)," the expert said.

However, of the $15.214 billion budgeted for Pdvsa this year, $1.1 billion will be end up in a trust for agriculture and infrastructure. Another social development plans will receive $600 million (up from last year's $29 million), according to the Ministry of Energy and Mines' plan.

Layrisse also warned about the low investments that have been budgeted for the eastern and western divisions, which usually rely on wells. In 2002, this areas received $2.771 billion, and the figure for 2003 fell to $1.551 billion; but in 2004, as the plans are to make exploitation exponentially, the programmed investment went up to $3.298 billion. "In conclusion, production will not grow this year; in fact, it might fall a bit as a result of the poor well treatment and the loss of specialized workers," Layrisse said. Translated by Edgardo Malaver

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