10-04-00 Petroleos de Venezuela, S.A. (PDVSA), the world's second largest energy company and one of the leading foreign suppliers of crude oil and refined petroleum products to the United States, recently announced its 2000-2009 Business Plan that calls for investments of over $ 53 bn in its oil, natural gas, chemicals, and manufacturing and marketing operations.
The plan is structured to almost double PDVSA's crude oil production and increase PDVSA's exports to the United States over the next 10 years. The goal of the overall plan is to strengthen and enhance PDVSA's role both in the world energy market and in the economic development of Venezuela.
Private sector participation will account for $ 31 bn or more than 50 % of the total anticipated investments under the plan. "Not only is new foreign capital welcomed in our natural gas and petrochemical business, among others, but we expect to encourage strong involvement from the Venezuelan private sector as well," said PDVSA President Hector Ciavaldini. "The use of private capital will have the dual benefit of increasing PDVSA's long-term profitability and the Venezuelan economy as a whole," he explained.

In accordance with the guidelines set by the shareholder and the dynamics of the market, PDVSA under the plan will increase substantially its crude oil production capacity from 3.56 mm bpd by the end of 1999 to 5.8 mm bpd by 2009, focusing on high value light and medium gravity crude oils. The plan also calls for crude oil exploration activity, funded solely by PDVSA, which is expected to add 10 bn barrels of crude oil to Venezuela's official proven reserves of 76.8 bn barrels.
Refining capacity in Venezuela will be increased by 200,000 barrels to 1.3 mm bpd, and more than half of the $ 2.7 bn in investments in this sector will be to meet more stringent environmental requirements both in Venezuela and PDVSA's primary export market, the United States. Production capacity for Orimulsion(r), PDVSA's brand-name boiler fuel that is composed ofbitumen from the country's eastern region, will increase from 5 mm tons to 20 mm tons in 2009.
Throughout the next ten years, significant attention will be given to expanding PDVSA's natural gas operations, and the development of these resources will be funded primarily by private capital. Venezuela has one of the world's largest natural gas reserves, with 142.5 tcf. By 2009, exports of methane gas are anticipated to reach 1 bn cfpd, production of natural gas liquids will almost double to 370,000 bpd, and export projects for LNG will be developed.

In the petrochemical arena, production of fertilisers, methanol, plastics, oxygenates and aromatics will more than double to approximately 22 mm tpy by 2009, and maximum effort will be undertaken to utilise PDVSA's refining facilities for the benefit of the chemical sector.
"The 2000-2009 plan has been developed pursuant to the policies of the government. It is fully aligned with the national vision of economic development for Venezuela and promises greater profitability and competitiveness for PDVSA in an increasingly globalised and environmentally- aware marketplace. Our goal is maximise value to our shareholder, as a strong commercial enterprise, and thereby play a substantial role in the economic recovery of Venezuela," said Ciavaldini.
In 1999, PDVSA's net income was $ 2.4 bn. Significantly contributing to PDVSA's positive results, in addition to higher oil prices, was a 20 % reduction in operational costs. These cost savings resulted from new contracting practices, the rationalisation of operations, business process improvements, disposal of non-productive assets, and the optimisation of the labour force.
PDVSA reduced senior management positions to 60 from 120, making its entire corporate organisational structure more compact and cost-effective. State-owned PDVSA is the tenth most profitable corporation in the world.

Venezuela has the sixth largest proven oil reserves in the world, the largest outside of the Middle East, and PDVSA ranksthird in refining capacity and fourth in production capacity world-wide. PDVSA provides 78 % of Venezuela's export revenues, 57 % of fiscal revenues, and accounts for 26 % of Venezuela's gross domestic product.
The United States is the largest market of Venezuelan crude oil and refined petroleum products and relies heavily on this relationship for its energy security. Approximately 528 mm barrels of crude oil and refined products are imported annually by the United States from Venezuela, comprising almost 14 % of all oil imports by the United States. More than 59 foreign oil and petrochemical companies, including 24 US companies, have investments in the Venezuelan oil industry.

PDVSA currently has budgeted $ 370 mm for the purchase of goods and services in the United States. Also, PDVSA has substantial investments in the United States, amounting to $ 5 bn, including CITGO Petroleum Corporation, a wholly-owned subsidiary headquartered in Tulsa, Oklahoma.

CITGO is a major US refiner and the largest gasoline retailer in the United States. PDVSA's employees number 41,500 in Venezuela. CITGO employs 4,240 persons throughout the United States and supplies through its extensive jobber network more than 15,000 independently owned and operated retail gasoline stations.