Reuters quoted a document seen by the news agency as saying that the state oil company PDVSA would need to invest ৮ 56 billion to bring back the volume it was producing in 1999.
A document seen by Reuters news agency shows Venezuela’s state oil company PDVSA needs 58 58bn to invest in restoring 1998 crude production before former president Hugo Chavez comes to power.
In a document titled “Investment Opportunities” in February 2021, Petrolos de Venezuela’s Department of Planning and Engineering said it was seeking capital investment from Venezuelan and foreign partners primarily to restore oil production infrastructure and develop “under the new business model”.
The key new partnership model detailed in the document is the use of manufacturing service contracts (ASPs).
Under the agreement, the contractors will provide 100 percent financing to the oil fields and receive a portion of the project’s free cash flow in return. The state of Venezuela will remain the sole owner of the fields and related infrastructure.
The crisis-stricken South American country produced only 578,000 bpd of crude oil in March, below the 2021 target set by the Organization for Petroleum Exporting Countries (OPEC) at 1.21 million bpd, according to figures.
The proposal comes as President Nicolas Maduro seeks to establish ties with the private sector to attract investment to rebuild the country’s crumbling economy, rather than to strengthen state control under Chavez’s socialist model.
According to the document, the top three goals of Venezuela’s oil industry are “to stabilize and restore crude and gas production,” “to restore reliability, safety and quality of operation,” and “to fully supply the domestic market with fuel.”
Washington banned the PDVSA to oust Maduro, whom they identified as a dictator. Venezuela’s socialist government has accused the United States of trying to control its oil resources.
Tightening sanctions in 2019 under former U.S. President Donald Trump complicated the company’s ability to attract investors, given the risk that its partners themselves could be blacklisted.
Moreover, even state-owned entities in Maduro’s hardline allies, such as Russia and China, are wary of increasing cooperation with the PDVSA after years of high targets of corruption and operational inefficiency obscure projects.
The PDVSA has identified a total of 152 “opportunities” that require an investment of .6 77.6bn, including the management of refined and gas production, transportation and storage, as well as midterm operations and refining and commercialization.
The lion’s share of the required investment, or more than bn 69bn, will go to crude and gas production infrastructure.
Of this, উদ্যোগ 58 billion is needed to bring the joint venture and PDVSA’s crude output back to its 1998 level from its own oil fields, with another .3 11.3 billion going to overseas and coastal gas fields.
PDVSA further estimated that projects for pipeline, gas injection in oilfields, terminals and projects for refineries due to lack of maintenance require 7.65bn.
Neither PDVSA nor the Venezuelan oil ministry responded to requests for comment.
Venezuela has some of the largest crude reserves in the world, but its oil industry is still performing well below capacity after years of small investments.
Following the possible change of government, the country’s opposition has devised its own plan to restructure and attract investment.
Last year, a technical committee working with the opposition set a less optimistic target: the country needs about $ 98 billion to increase its output to 2.2 million bpd.
In addition to the Manufacturing Services Agreement (ASP), the PDVSA document also advertised the opportunity to invest in joint ventures with private partners, although it did not specify what changes would be made to the business model of these projects.
PDVSA needs to have maximum participation in all joint ventures under Venezuelan law.