- Sputnik International, 1920
World
Get the latest news from around the world, live coverage, off-beat stories, features and analysis.

Venezuela's PDVSA Reportedly Needs $77.6 Billion to Rebuild Decaying Oil & Gas Industry

© AP Photo / Fernando LlanoIn this Feb. 18, 2015 photo, storage tanks stand in a PDVSA state-run oil company crude oil complex near El Tigre, a town located within Venezuela's Hugo Chavez oil belt, formally known as the Orinoco Belt
In this Feb. 18, 2015 photo, storage tanks stand in a PDVSA state-run oil company crude oil complex near El Tigre, a town located within Venezuela's Hugo Chavez oil belt, formally known as the Orinoco Belt - Sputnik International, 1920, 11.05.2021
Subscribe
It is unclear, however, how the state oil company plans to raise such a vast sum of money from investors while remaining under sanctions from the US which affect both funding and oil sales.

Venezuelan state-owned oil giant Petroleos de Venezuela SA (PDVSA) believes an investment of $77.6 billion can set the country's oil and gas industry back on its feet, according to an internal document obtained by Reuters. The paper titled "Investment Opportunities", reportedly drafted in February 2021 not long after new US President Joe Biden was inaugurated, envisages a total overhaul of the country's gas and oil infrastructure, oilfields, refineries and other facilities to increase crude output to several million barrels per day instead of the present 578,000.

Venezuela's PDVSA Reportedly Needs $77.6 Billion to Rebuild Decaying Oil & Gas Industry - Sputnik International, 1920, 11.05.2021
PDVSA

For that, the PDVSA requires not only government, but also foreign investments. More than $69 billion is needed to bring the decaying oil and gas production infrastructure up to date, the company's document reportedly estimates. Another $7.65 billion is reportedly needed to revive pipelines and other auxiliary infrastructure, which has been in a dire state for years because of underinvestment and partly external economic pressure from the US.

Reuters says that according to the PDVSA report, at least $58 billion is needed to upgrade the country's energy industry enough to return to pre-Chaves production levels of around 3.4 million barrels per day last seen in 1997. In total, PDVSA reportedly outlined 152 "opportunities" worth around $77.6 billion to invest in to "restore reliability, safety and quality of operations" and "fully supply the domestic market with fuels".

Investor Relations

Despite being in dire need of cash to bring these ambitious plans to life, PDVSA reportedly does not suggest reversing the country's long-time policy of keeping its oil and gas fields nationalised in the document. Instead of offering investors a share in the joint venture, the Venezuelan oil giant reportedly offers to build relations on production services agreements or ASPs.

Under them, investors would fully fund operations in the oil and gas fields and would receive a portion of the resulting free cashflow in return. Still, such a scheme would mark a step back from the approach to working with the private sector preached by the past two governments.

It is unclear, however, how PDVSA, which refused to comment on the document's authenticity, expects to attract financing and pay back the investors. Venezuela and PDVSA are under heavy US economic sanctions, which limit both foreign investments in the oil industry and the country's ability to sell crude. According to media reports, however, Caracas has found ways of keeping the oil trade with China alive despite sanctions.

Jeaniel Jimenez directs another worker before loading an oil tanker at the Jose refinery in eastern Puerto la Cruz, about 300 kilometers, 186 miles of Caracas, Venezuela, Wednesday, Feb. 12, 2003 - Sputnik International, 1920, 23.04.2021
Venezuelan State Oil Giant Reportedly Falls Short of Exportable Crude Due to Bump in Gasoline Output

It is possible that the report's authors prepared the document in case President Joe Biden reverses Trump's 2019 decision to impose economic measures in an attempt to oust Venezuelan President Nicolas Maduro, whom Washington accused of rigging his last re-election. The sanctions further impeded PDVSA's ability to upgrade outdated equipment needed to extract heavy blends of oil and refine it into gasoline, deepening the economic crisis and triggering fuel shortages in Venezuela.

Newsfeed
0
To participate in the discussion
log in or register
loader
Chats
Заголовок открываемого материала