See all articles

PDVSA sees heavy-oil role

Venezuelan companies looks to supply needs of the eastern hemisphere

Venezuelan state oil company PDVSA sees itself as a key low-cost supplier of heavy oil to the eastern hemisphere, an executive said at the World Petroleum Congress in Istanbul.

The country aims to position itself as a key provider of heavier crudes to growing markets like China, India and the Russian Federation, according to Hector Andrade, executive director of corporate planning at the oil giant.

"We have the largest crude-oil reserves on the planet. The oversupply right now is mainly related to light oil," Andrade said during a plenary session at the event, where the company showcased its business plan.

He added: "Our vision is to be the primary provider of low-cost heavy oil around the world."

Venezuela has faced its share of economic and political struggles lately, with economic stagnation and high levels of state control by President Nicolas Maduro, successor to the leftist Hugo Chavez.

But it still possesses the world's top oil reserves at over 300 billion barrels, and some of the lowest production costs, Andrade highlighted.

Using numbers from 2015, the average production cost for PDVSA was about $10 per barrel, given the upgrade process for heavy oil.

But when heavy oil and light oil are mixed, the cost of production stands at below $5, he explained.

"We have other things to solve, but the cost of production, and the low oil price is not an issue for us," Andrade added.

PDVSA has teamed up with partners in a range of joint ventures, which include 23 foreign companies and production of 1.3 million barrels per day.

The company says its "most conservative" aspiration is to add production of 1 million barrels per day over the next seven years.

For that goal, it is also seeking additional partnerships, Andrade said.

"We offer to an investment portfolio with 71 major projects," he said, an "opportunity" that could reach tens of billions of dollars.

"We adjust our business model to the new dynamic of flows of capital and oil around the world," he said.

That said, "We have a very different geopolitical reality than the other regions around the world."

The company believes its projects complete favourably with US shale oil, and recently said it guaranteed "legal security" to investors after a Reuters report on a government advisor's suggestion that the ventures be nationalised.

PDVSA declined comment on that issue at the WPC.