Spanish oil giant Repsol is preparing to invest another $4 billion in oil and gas projects in Venezuela between 2013 and 2022, hoping to increase net oil output in the country from around 40,000 barrels per day currently to 100,000 bpd in the next decade.
Repsol and Venezuelan state oil company PDVSA run mature oilfields in the east and west of the country that produce about 40,000 bpd, but the country is sitting on top of some 211 billion barrels of proven oil reserves and the government is looking to draw in more foreign investors to boost production to 6 million bpd by the end of 2019.
Repsol—which already runs an offshore natural gas project with PDVSA—is also part of a consortium eyeing Venezuela’s prolific Orinoco extra heavy crude belt, in which it owns an 11% stake, with PDVSA owning a 60% stake. India's Oil and Natural Gas Corp (ONGC) also holds an 11% stake in the project while the Indian Oil Corp (IOC) holds a 3.5% stake.
Related article: World Depends on Two Countries for Increase in Oil Production
Venezuela is the largest oil exporter in the Western Hemisphere, and the eighth largest in the world, while its oil and gas sectors account for some 25% of gross domestic product (GDP). However, production has been declining due to maturing fields, upkeep problems and a lack of proportionate foreign investment.
In September, Malaysian firm Petronas announced it would exit its JV in the Orinoco Belt due to disagreements with the government, seeking to divest its 8% share. The will upset the government’s plans for $20 billion in investment and the construction of a 200,000 bpd upgrader that would convert heavy crude to light oil.
While investors aren’t flocking to Venezuela, and Petronas is looking to withdraw, Repsol is seeking to expand its footprint not only in Venezuela, but across Latin America. The company has announced an investment plan of $25 billion between now and 2016. Its Q2 2013 earnings were at $409 million—12.4% higher from the same period a year ago.
This is all despite Repsol’s troubles in Argentina, where the government expropriated Repsol’s 51% stake in oil company YPF.
By. Charles Kennedy of Oilprice.com