Venezuela checks oil production decline for now
Venezuela's state-owned PdV has checked a decline in crude production mainly thanks to repairs to two heavy-crude upgraders run by its joint ventures with foreign partners, according to PdV officials, Argus estimates and internal company data.
Output is holding at around 1.1mn b/d for now, but it is unlikely to be sustained without substantial new investment, PdV mid-level managers say.
The upgraders associated with the PetroMonagas and PetroPiar joint ventures, both led by PdV with majority stakes, have undergone key repairs in recent months, stabilizing operations and freeing up more production from the Orinoco heavy oil belt.
The repairs and maintenance include replacement of pumps, valves and refractory tiles, as well as furnace cleaning, a Venezuelan oil ministry official said.
The upgraders receive 8°-10°API Orinoco extra-heavy crude diluted with imported naphtha and convert it into lighter synthetic grades for export.
Russia's state-controlled Rosneft holds a 40pc stake in PetroMonagas. Chevron holds 30pc in PetroPiar.
The upgraders are two of four that were built at the terminal of Jose in Anzoátegui state in the 1990s. The government of late former president Hugo Chavez nationalized them in 2007.
The PetroCedeño upgrader, in which Total and Equinor hold minority stakes, is operating, but Petro San Felix, also known as PetroAnzoátegui and the only upgrader that is wholly owned by PdV, is off line.
The four upgraders have nameplate synthetic crude production capacity of more than 600,000 b/d.
Heavy-crude blending joint venture Sinovensa, in which China´s state-owned CNPC holds a minority stake, produces about 130,000 b/d of Merey blend.
In a separate indication of upstream activity, Baker Hughes reported that Venezuela´s rig count increased by two to 27 units in December compared with November. The December level is still well shy of the 48 rigs tallied by the oil services company in January 2018.
PdV internal production data, widely interpreted as systematically inflated, shows average output of around 1.4mn b/d in December 2018 and the first five days of January 2019. Critics inside the company point to consistent gaps between operated production — which is reported by field managers — and metered production overseen by the oil ministry. The latter is often higher. At the end of December, for example, metered flows of 345,000 b/d in PdV´s western division exceeded the operated level by more than 30,000 b/d. Orinoco metered output of almost 980,000 b/d was more than 100,000 b/d higher than operated production.
Current actual output is closer to 1.1mn b/d, steady with the average of secondary sources, including Argus, for the month of November, as published by Opec last month.
According to official Venezuelan data reported by the oil ministry to Opec, Venezuela produced 1.46mn b/d in November, compared with 1.43mn b/d in October and September.
Opec is scheduled to issue its next monthly report on 17 January.
Venezuelan crude production has plunged by around 800,000 b/d over the past year, with declines across PdV´s mature eastern and western divisions and the Orinoco oil belt, which has long been touted as the anchor of future growth. But a lack of investment, equipment breakdowns and theft, power outages and labor flight have undercut efforts to revive production, which peaked at more than 3mn b/d in the 1990s.
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