PDVSA: Seeking for financing
PDVSA weighs up $4bn cash hunt
Venezuelan state-run giant PDVSA may seek as much as $4 billion in financing this year as it adjusts its investment strategy and cuts costs as low oil prices hit its budget.
The state oil company's plans also include revamping its major heavy oil reserve quantification project, and the delay of an Orinoco region licensing round, all steps in response to the global economic slowdown and the jittery state of global finance.
"We're evaluating financing of $3 billion to $4 billion this year, but it will all depend on what happens with oil prices," Eulogio Del Pino, PDVSA's vice president for production and exploration, told Dow Jones Newswires. "We're looking at financing options from China and Japan."
Del Pino declined to offer further details of the company's financing plans but did expand on how oil prices has affected the company.
PDVSA will delay the completion of the Magna Reserva project, a project to tot up deposits in four areas of the Orinoco heavy oil belt. Magna Reserva is a key element of President Hugo Chavez's oil industry policy.
Chavez claimed that booking more reserves in the Orinoco will officially make Venezuela the country with the second largest proven crude reserves in the world, after Saudi Arabia.
"The venture could take another six months of 2010 to finalise," said Del Pino. Magna Reserva's original completion date was October through December this year.
The Boyaca Block oil, believed to be the richest piece of oil real estate near the Orinoco river belt, will remain unexplored until next year, he said.
However, Del Pino said that PDVSA is adding new oil-rich areas to the Magna Reserva project, including old wells in the Aguaro Guariquito national park, bordering the Orinoco.
It is estimated that some sites in the park could hold anywhere between 5 billion and 10 billion barrels of crude, based on preliminary estimates.
Del Pino insisted that despite delays, Venezuela will certify the extra oil to reach a total of 200 billion barrels in proven reserves by the end of this year. In its latest reserve booking on Tuesday, Venezuela now claims to have 172.3 billion barrels in proven oil reserves.
Other projects meant to increase oil output are also suffering delays. Late last year Chavez opened up the Orinoco region in a licensing round that the oil ministry may choose to adjust, Del Pino said.
"Companies participating in the licensing process have asked for a timetable extension," he said. "These days companies are having trouble securing the needed financing for these ventures."
Del Pino said the oil ministry will decide in the end on any official timetable changes.
Under the rules of the Carabobo field licensing round, foreign partners are required to plan and finance the oil pumping and processing of heavy oil, while retaining a minority stake in ventures with the state.
Oil industry executives have been complaining for weeks of delays in the timetable that many of them attribute to PDVSA.
Meanwhile, Venezuela's oil now fetches $40.75 a barrel, below the $60-a-barrel needed for this year's state budget. Chavez's government is already planning spending cuts and changes to the original budget estimates.
Nonetheless, Oil Minister Rafael Ramirez - who also heads PDVSA - has insisted that no oil ventures will be scratched, despite the global financial crisis.
Most industry observers believe Venezuela will be forced to delay a number of oil projects as Chavez continues to favour social spending over oil industry investment.
PDVSA still plans to invest $12 billion in the industry this year, close to 2008's spending level.