Venezuelan state oil company PDVSA would need $58 billion in investment to revive its crude production to the levels of 1998 before ex-President Hugo Chavez came to power, equivalent to 3.4 million barrels per day (bpd), a document seen by Reuters shows.
According to a Reuters report, in the February 2021 document entitled “Investment Opportunities,” Petroleos de Venezuela’s (PDVSA.UL) planning and engineering division said it was seeking capital investment from Venezuelan and foreign partners, mostly to recover and upgrade oil production infrastructure “under new business models”.
The main new partnership model PDVSA detailed in the document was the use of production services agreements (ASPs).
Under these deals, contractors would finance 100% of operations in the oilfields and in return would receive a portion of the project’s free cash flow as payment. The Venezuelan state would remain the full owner of the fields and the associated infrastructure.
The crisis-stricken South American nation produced just 578,000 bpd of crude in March, according to figures the country provided to OPEC, well below the 2021 goal set in the document of 1.28 million bpd.
The proposal comes as President Nicolas Maduro is seeking to mend ties with the private sector to attract investment to rebuild the OPEC nation’s collapsing economy, in a reversal of tightening state control under Chavez’s socialist model.
Venezuelan oil industry’s top three goals, according to the document, are to “stabilize and recover crude and gas output,” “restore reliability, safety and quality of operations,” and “fully supply the domestic market with fuels.”
Meanwhile analysts have said new oil producer Guyana is well on its way to surpassing Venezuela as one of Latin America’s top three oil producers.
The country is already on course to produce over 800,000 barrels of oil per day by 2025 from three sanctioned developments – Liza 1, 2 and Payara – and a third – Yellowtail – for which U.S. oil major ExxonMobil is now seeking government approval.
Additionally, Exxon is targeting up to 10 FPSOs to develop the more than 9 billion barrels of oil equivalent resources it has found at the prolific Stabroek Block.
Guyana’s total output is expected to exceed the 1 million barrels per day mark before 2030.