Light Venezuela decline outpaces heavy increase
Light crude production fell by more than 200,000 b/d to around 375,000 b/d in the five years to the end of 2015, while medium crude output dropped by 235,000 b/d to around 680,000 b/d, state-owned PdV's new 2015 annual operations report reveals. Falling light crude output is outpacing PdV's capacity to bring Orinoco extra-heavy crude output on stream. Heavy and extra-heavy crude production climbed by only 160,000 b/d to nearly 1.6mn b/d over the five-year period, according to the official report.
PdV is targeting 6mn b/d of crude production by the end of 2019, with two-thirds of the total coming from the Orinoco oil belt. Argus estimates current crude production at around 2mn b/d. But PdV's inability to check falling production of light grades such as 32°API Mesa implies a growing reliance on light crude imports to blend with 8-10°API Orinoco output to produce exportable 16°API Merey, which is targeted at the Asia-Pacific market, and primarily China. PdV currently imports over 50,000 b/d of light crude to produce Merey. The firm expects Merey to become its primary export grade with output of 4mn b/d by 2019, up from around 1.25mn b/d at present, the energy ministry says.
But PdV may have to import "well over 1mn b/d of light crude" to achieve its Orinoco production and Merey export targets by 2019, an energy ministry official says. The Orinoco expansion will depend on Venezuela's ability to export Merey to earn revenue. The incremental cost of importing higher amounts of light crude to blend with the country's heavy output undermines the economics of the project, according to officials associated with Caracas-based oil industry association AVHI and Maracaibo-based oil services industry chamber CPV.
PdV has largely shifted its Orinoco development strategy towards blending and away from upgrading its heavy oil into synthetic light grades over the past year, because of the high capital cost and logistical complications associated with the upgrading process. PdV currently runs four upgraders with a combined capacity of 600,000 b/d that date back to the 1990s. But insufficient maintenance and sporadic power supply in recent years have sparked frequent breakdowns at the upgraders, which are located in the industrial city of Jose on the coast of Anzoategui state.
Oil belt tightening
Venezuelan crude production, including condensates but not natural gas liquids (NGLs), declined by around 230,000 b/d to 2.7mn b/d in the five years to the end of 2015, the annual report indicates. Energy minister and PdV chief executive Eulogio Del Pino blames lower oil prices and a drought-induced power supply crisis for the firm's upstream problems last year and a 120,000 b/d crude production drop in the first half of 2016. But officials at PdV's eastern and western divisions say oil price trends are only one factor in the apparent stagnation of PdV's Orinoco-centred upstream plan.
"Other factors include 10 years of insufficient investment by PdV, unpaid debts accumulated with service companies and partners, cumbersome bureaucracies at the energy ministry and PdV that hinder progress, lack of critical support infrastructure from wells to terminals, and a legal and regulatory framework that does not appeal to foreign oil companies," an official at PdV's western division says.
Del Pino pledged earlier this month that PdV would boost upstream production by up to 200,000 b/d before the end of this year, but the official says such a production increase is "impossible given the company's current economic problems".
2470989
Venezuelan crude exports
Комментарии