Petrozuata running over budget
26-10-98 Venezuela's Petrozuata oil venture has run about $ 400 mm above budget due to higher than expected wage bills and an overvaluation of the local bolivar currency, company officials said.
The finances of the $ 2.8 billion project have been further dented by lower-than-expected revenues from early production, according to Standard and Poor's.
"The cost increase that we have is around $ 350-$ 380 mm," Petrozuata president Maria Lizardo.
Many Venezuelan exporters complain about the government's policy of overvaluing the local bolivar currency as a means of anchoring inflation.
The partners, consisting Conoco Inc with 50.1 % and PDVSA with 49.9 %, plan to make the additional equity payments mostly in 1999, Lizardo added.
Petrozuata managed to issue $ 1 bn in bonds to help finance the venture, and achieved interest rates considerably lower than the level the country pays for government debt.
"PDVSA has always been a very reliable partner...we therefore don't worry unduly about them
defaulting or anything like that," said Rob McKee, executive vice-president of Conoco. "They realise as well as we do that it would be a very serious mistake to default on any of the promises we have made for that financing."
Petrozuata is the most advanced of three Orinoco ventures that together will pump 440,000 bpd of tar oil in three years.
It is currently pumping 42,000 bpd of extra-heavy oil and Lizardo hopes to achieve 120,000 bpd by mid-2000 when a huge upgrading plant is due to be completed at the Caribbean export terminal Jose. Petrozuata has already completed construction of a 200 km pipeline to ship the oil to the coast.
