In a speech at the IV International Opec Seminar on expanding production upstream/downstream, held this week in Vienna, Energy Minister Rafael Ramirez said:
“Hoy en día, con la tecnología de mejoramiento que está instalada en Venezuela y con la participación de nuestros socios internacionales, se producen en la Faja aproximadamente 800 mil barriles día. De ellos, un poco más de 600 mil barriles día se somete a procesos de mejoramiento, de los duales se obtienen alrededor de 510 mil barriles día de crudo mejorado (cuando hablamos de mejoramiento nos referimos a un proceso básico de extracción de coque y azufre que permite llevar este crudo de 8°API a un crudo con una calidad de hasta 32°API).”
Ramirez said in Vienna that production in the Orinoco oil belt now averages “approximately 800,000 b/d.”
The four extra-heavy crude production/upgrader projects nationalized on 1 may 2007 have a combined crude production capacity of about 600,000 b/d, and their combined upgrading capacity is about 520,000 b/d – give or take. (These numbers are rough estimates.)
The difference of 200,000 b/d, presumably, might include production related to the Magna Reserva reserves certification initiative through which Pdvsa expects to confirm it has 315 billion barrels of extra heavy crude reserves.
But this is unlikely, since the Magna Reserva certification process is essentially a dog and pony show.
Pdvsa is, indeed, doing some drilling. But the Magna Reserva process certainly has not increased Orinoco oil belt production by 200,000 b/d – or 73 million barrels a year.
In fact, Ramirez claims that Venezuela cut Orinoco oil belt production by 300,000 b/d since 1 January 2009 to comply with its OPEC quota, which mandates production cuts of approximately 360,000 b/d.
It’s also a fact that PetroMonagas (Cerro Negro) shut down completely in January 2009, taking 120,000 b/d off line in the oil belt.
This left 180,000 b/d of Orinoco production cuts which Pdvsa reportedly spread between the three other upgraders (Petrozuata, Petropiar and Petrocedeno) in January 2009, when the Chavez regime deliberately forced over 60% of Venezuela’s Opec cuts on joint ventures which collectively account for only 25% of Venezuela’s total crude production.
Ramirez obviously is lying, and he lies very frequently, almost daily, about Pdvsa’s real production, refining, export, financial, etc. data.
But the world’s leading energy news and intelligence services, almost unanimously, do not challenge the Venezuelan government’s official numbers despite ample empirical evidence – like Ramirez’s contradictory statements – that the official numbers are complete fabrications.
Ramirez also said this week in Vienna that needed investments in oil and gas production capacity cannot be made unless the price of oil is at least $70/bl.
Anything lower than $70/bl. means no investments at all in new production capacity, he said.
Ramirez presumably was speaking about the global price environment, but almost certainly he meant Venezuela – given that his own experience is limited to Venezuela.
(Remember that Ramirez is an oil draftsman (a “dibujante tecnico”) who came out of the ministry, and who beyond his loyalty to Chavez doesn’t know anything at all about the oil industry or managing a huge company like Pdvsa.)
But even $70/bl probably is too low a price for Pdvsa to cover its planned investments and also funnel cash to the Chavez regime, which cannot stay afloat peacefully without an ever-growing oil revenue stream.
Meanwhile, Finance Minister Ali Rodriguez Araque said this week that the government is recalculating its 2009 budget with a new average price of $40-45/bl, which is $15-20/bl less than the original budget ($60/bl) and 25-30/bl less than the $70/bl minimum price at which planned oil/gas capacity expansion investments are financially doable.
The implication of Ramirez’s remark about the minimum oil price needed for investments is that even with an average price of $60/bl in 2009 Pdvsa would have found it difficult (impossible?) to carry out its planned investments.