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Venezuela, in the midst of a humanitarian crisis of epic proportions, would need $58 billion to return its oil industry to its former glory and 1998 production levels, according to a PDVSA document seen by Reuters.
The February 2021 document titled Investment Opportunities and authored by PDVSA’s planning and engineering division revealed its need for cash from the Venezuelan government and from foreign partners to restore its energy infrastructure.
Venezuela’s production has sunk from more than 3 million barrels per day pre-Hugo Chavez to just over half a million barrels today.
According to the document, PDVSA engineering wanted to use PSAs as the vehicle to improve the oil giant’s oil production. In this theoretical-at-best scenario, PDVSA contractors would 100% finance oilfield operations. As compensation, these not-so-risk-averse contractors would receive part of the free cash flow.
But foreign oil companies have been down this road before, and many were burned when the socialist regime clawed back all oil assets in Venezuela that were owned by foreign entities in a relentless push to nationalize its energy industry.
But that hasn’t stopped Nicolas Maduro from an attempt at wooing foreign oil companies back to the land of plentiful oil.
The document, which details 152 distinct opportunities that are worth $77.6 billion, outlines three goals for Venezuela’s oil industry. The first, to stabilize and restore oil and gas output, is no doubt the primary objective. The second is to restore reliability, safety, and quality of operations. The third is to “fully” meet the domestic fuel needs of the Venezuelan people.
PDVSA’s production--and certainly its refinery output--has floundered in the wake of years of mismanagement, underinvestment, and strict U.S. sanctions that have all but dried up its crude export avenues.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.