Venezuela to expand oil production capacity to 4.25 million by 2015

[spanza]

Energy
Venezuela's oil capacity should reach 4.25 million barrels per day (bpd) by 2015 from the current production of 3 million bpd, said on Tuesday Venezuelan Minister of Energy and Petroleum Rafael Ramírez in an oil conference which is being attended by top oil company executives, including the CEO's of Chevron Corp. and Statoil ASA.

"At the moment, we have an annual production of 3 million barrels per day. And we have an investment plan to create sufficient capacity to produce 4.25 million barrels per day by 2015," Ramírez added.

The oil minister said that Venezuela's production capacity should rise to 6.862 million barrels a day by 2021, Reuters reported.


http://english.eluniversal.com/2009/11/03/en_eco_esp_venezuela-to-expand_03A2993331.shtml

[Braulio]

1. I see they revised their plan down

The Siembra Petrolera plan presented by Ramirez in 2006 projected 4,8 million barrels per day by 2015. Therefore they have already reduced their forecast by 0,6 million barrels per day. It's better to focus on the increase - 1.25 million barrels per day, rather than the total, because OPEC says Venezuela is producing a lot less (see page 36 of 64 pages in this OPEC report)

/www.opec.org/home/Monthly%20Oil%20Market%20Reports/2009/pdf/MR102009.pdf

According to OPEC, Venezuela produced 2,267,000 Barrels per day in September 2009. There is a discrepancy between Venezuela and OPEC figures, but it's possible the two need to publish a document explaining why they're so far apart. I suspect this discrepancy may be caused by the way "oil" is described by Venezuela, they may be lumping NGLs into their oil statistics (although this doesn't make sense because NGLs are definitely not oil).

So let's look at reality according to OPEC: Actual production 2.3, and Ramirez' production increase projection 1.25. This takes us to 3.55 million bpd in 2015. This would a bit above the peaks reached in 1974 and 1999 (see the graph below):



The key question is, what will the Venezuelan government do to achieve a production increase and reverse the decline they have experienced in the last 10 years? They would have 5 years to put on line 1.25 million bpd, PLUS they would have to offset the decline from existing fields. My guess is they would have to put on stream AT LEAST 1.5 million bpd in new project capacity.

And this means putting on stream the developments touted for the Orinoco Oil Belt. None of which will be carried out unless the government accepts foreign investment. Foreign investment, alas, won't take place unless Venezuela changes its current tax and legal regime.

So lets look forward to action by the Venezuelan Congress to change the regime, making things more attractive to foreign investors. Otherwise, these projects won't happen. And this means the new oil supply from Brazil takes on added importance. Given Venezuela's lack of performance in the oil sector, and its erratic behaviour, I expect the US government will make sure it can compete with the Chinese for Brazilian oil supplies, because Brazil is likely to become Latin America's new oil giant.