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Oswaldo Cisneros, a billionaire Venezuelan businessman on friendly terms with the Socialist regime, is pouring in US$1 billion in a joint venture with state-held PDVSA, as the government is trying to lure private investments to revive persistently declining oil output, The Wall Street Journal reports, citing PDVSA’s president and a spokesman for Cisneros.
Cisneros—who has made his wealth in media, breweries, telecommunications and real estate—leads a company held by Venezuelan businessmen, Delta Petroleum NV, which is expected to sign next week an agreement to invest US$800 million in the joint venture with PDVSA, PetroDelta, according to the WSJ.
The billionaire businessman has recently completed the acquisition of a 32-percent stake in PetroDelta from U.S. company Harvest Natural Resources Inc (NYSE:HNR) and Argentina’s Pluspetrol in a cash-and-stock transaction worth around US$200 million.
Cisneros intends to increase PetroDelta’s production to 115,000 bpd in three years, from the current 40,000 bpd, his spokesman told the WSJ.
The private investment will be coming at a time when low oil prices have crippled the finances of PDVSA, which is seeking to convince bondholders to join a bond swap deal. Earlier this week, the company extended the deadline for the offer until Friday, and warned that if it fails, it would find it difficult to service debt and will be “evaluating all alternative options”.
The investment will also be coming at a time when Venezuela’s oil production has dipped to 13-year-lows, with low oil prices crippling its oil-revenue-dependent economy. The country is desperately pushing for an OPEC production limit deal that may lift crude prices and boost its oil revenues.
In addition, Cisneros—who has been keeping a low profile—is apparently on friendly terms with President Nicolas Maduro as he had been with his predecessor, Hugo Chavez. According to the WSJ, people close to Cisneros’s companies say that none of them has faced expropriations or frequent audits.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.