PdV taps credit to boost oil exports to China

OREANDA-NEWS. August 10, 2016. Venezuelan state-owned PdV aims to increase crude exports to China to more than 1mn b/d by 2019 using Chinese loans to fund accelerated development of upstream joint ventures in which Chinese state-owned CNPC is a minority shareholder.

PdV currently exports about 600,000 b/d to Chinese companies, mostly in the form of 16°API Merey favored by Chinese teakettle refineries that have boosted crude runs following the liberalization of imports last year.

Energy minister and PdV chief executive Eulogio Del Pino said a new \\$5bn loan from China Development Bank will fund output capacity expansions at PetroZumano and PetroUrica, in which Chinese state-owned CNPC holds 40pc stakes.

PdV is already using a \\$4bn CDB loan granted in June 2014 to increase crude blending capacity at 170,000 b/d Sinovensa, a joint venture formed in 2008 with 40pc shareholder CNPC at the Jose complex in Anzoategui state, to 330,000 b/d by end-2017, Del Pino said.

Sinovensa blends extra-heavy Orinoco crude with light grades to produce Merey.

Sinovensa expects to complete a 30,000 b/d dehydration and desalting unit by end-2016 that will enable the venture to raise blended crude output by 50,000 b/d to about 220,000 b/d in early 2017, Del Pino said. Sinovensa's blended crude output is projected to increase up to a further 110,000 b/d by end-2017.

"The energy China will require in the future is here in Venezuela, and that is why we are working jointly to assure (China's) oil supply regardless of the temporary situation with oil prices," Del Pino said, echoing a 24 December 2004 pledge in Beijing by late President Hugo Chavez that Venezuela's oil would "guarantee China's oil requirements forever."

PetroZumano operates the 10,000 b/d Zumano field in Anzoategui state. The mature extra-heavy crude field produced 4,000 b/d when the joint venture was created in 2007 with a goal of producing 50,000 b/d.

PdV's 400,000 b/d PetroUrica extra-heavy crude joint venture with CNPC in the Orinoco oil belt's Junin division produced about 3,000 b/d of extra-heavy crude in 2015.

PetroUrica and PetroZumano will use Chinese enhanced thermal recovery to boost well productivity, the energy ministry says. PdV is aiming to boost recovery to 40pc at heavy and extra-heavy oil fields where traditional recovery factors are about 10pc.

PdV and CNPC also are jointly accelerating development of crude handling infrastructure projects that will increase transporting and shipping efficiencies, Del Pino said.

PdV and CNPC plan to reroute a growing volume of China-bound oil exports from Venezuela through the expanded Panama Canal, Del Pino said.

Currently, a supertanker leaves Venezuela for China every three days and takes 45 days to reach Chinese soil, but using the Panama Canal expansion will reduce transport times," Del Pino said.

Venezuela has borrowed more than \\$50bn from Beijing over the past decade. Most of the credit is backed by oil exports.