Venezuela: Low Production and Exploration Activity at PDVSA
By Marianna Párraga | El Universal
Caracas, 14 June 2005 | Up until March there has been a gap of 211 million BPD between what was predicted and what it actually produced. A few weeks ago President Chávez admitted on his Sunday program that so far this year Petróleos de Venezuela has not been able to meet the average volume goal established for 2005, because problems with drilling activity in the West had been causing a loss of about 100,000 BPD.
The gap between what has been produced and what was budgeted by PDVSA between January and March is reflected in a document prepared by the company's Office of Finance, according to which 3.14 million BPD were produced in the country, 260,000 BPD below what was planned. The decline is attributable almost entirely to PDVSA’s own production, which rather than the predicted 2.26 million BPD, has instead averaged 2.03 million BPD between January and March, a difference of 211,000 BPD.
Parallel to this gap in oil production, PDVSA capital expenditures for exploration and production fell behind significantly, seeing as $2.599 billion of what was budgeted for 2005, only a mere $263 million has been spent —10.11% of the total—, which may bring about future declines in drilling activity figures.
The total amount of capital expenditures in this activity, which makes up the backbone of PDVSA, received a record budget of $2.140 billion for 2004 —between 2002 and 2003 between $842 million and $1.487 billion were disbursed—. Nevertheless, by the end of the year $1.565 billion had been spent, creating a shortfall of $575 million.
During his appearance last week before the National Assembly’s Committee for the Office of the Comptroller, PDVSA's Vice President for Exploration and Production, Luis Vierma, said that for 2005, PDVSA’s business plan forecasts the activating of some 116 drilling rigs, 86 of which are currently operative. Notwithstanding, it is estimated that the rehabilitation of some 23 barges on Lake Maracaibo will contribute to sustaining production within 18 months.
On his part, the oil company’s president, Rafael Ramírez, yesterday stated that PDVSA “is going to focus on its core activity, which is exploration and production,” with the aim of meeting volume goals for the year. “In the East we are now producing more than was foreseen,” he affirmed.
The document from PDVSA’s Office of Finance also states that the social development programs that are being administered by Corporación Venezolana de Petróleos this year will receive $3.100 billion.
Of these, $500 million are assigned to the infrastructure trust maintained by Bandes (the Bank for the Economic and Social Development of Venezuela), another $600 million for the Zamora Fund for agriculture and the remaining $2 billion will go to the Special Fund for Development which, although it was not contemplated at the beginning of the year, enjoys the Central Bank's authorization, according to what its directors have confirmed. This last entity is the only one to have received contributions —some $480 million in total— from the the company during the first quarter.
In 2004 the social development programs supported by PDVSA received a total of $3.120 billion, $20 million over what was budgeted. This figure is much higher the amounts PDVSA had been accustomed to spending for this purpose up until 2003, and represents 42.8% of the total capital expenditures planned for 2004.
Translation by W.K.
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