Venezuela needs to change its view of PDVSA

Jun 21, 1999 02:00 AM

Venezuela must no longer see PDVSA simply as an oil producer and profit generator for the country, but instead as a international energy corporation, PDVSA president Roberto Mandini said during the company's extraordinary shareholder meeting recently held in Caracas.
At the meeting the executive also announced a 43 % reduction in PDVSA's budget for the period 1999-2009 to $ 59 bn, an amount which includes expenses by third parties in joint projects.
The company's primary goals will be to position itself in new markets, increase light and medium crude production, increase Venezuela's refining capacity and the development of the country's natural gas and petrochemical sectors with extensive private participation.
PDVSA has also reduced its oil production goals from between 6.2 and 6.5 mm bpd down to between 4.8 and 5.2 mm bpd, considering an expected global demand of between 85 and 92 mm bpd. The company plans to increase its own refining capacity by some 300,000 bpd over the same period,Mandini said.

Meanwhile, Congress is expected to approve a new Gas Law, which comprises the formation of a Gas sector regulator; as well as an Electric Power Law, Hydrocarbons Industrialisation Law and amendments to the Internal Market Law and Regulations of National Participation, Mandini said.
The amendments will allow the government to go ahead with an Offshore Gas Licenses Round, a Non-Associated Gas Development Licenses Round and the placement in the market of shares of the Orinoco Belt Heavy Crude Projects.

The announcement of the reduction of oil production is a realistic and clear message to world markets that Venezuela has no intention of flooding the market and will work towards stabilising international prices, Ernst & Young director in Venezuela Daniel Demunter told.
"It is a good sign for the international market, but it may not be very well viewed locally," he explained. Venezuela has currently reached very high unemployment levels mostly caused by the country's decision to comply with OPEC oil production cuts.
Daniel Demunter added that PDVSA may have devised the cutbacks to pre-empt a possible levelling out of the US economy after six years of uninterrupted growth.

Source: BNA via Iinoil
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