Caracas, November 7, 2016 (venezuelanalysis.com) – Venezuelan state oil company PDVSA has signed financing deals worth US$1.45 billion with the Indian government’s Oil and Natural Gas Corporation (ONGC) and local firm Delta Petroleum.
Announced on Friday, the agreements include a US$318 million investment loan from ONGC and US$1.13 billion in financing from DP Delta Finance, owned by Venezuelan businessman Oswaldo Cisneros.
The investments will be used to significantly boost production in PDVSA’s joint ventures with the two firms, say government spokespeople.
According to the figures provided by Oil and Mining Minister Eulogio del Pino, the company is hoping to double production levels at its Indo-Venezuelan venture in the Orinoco Oil Belt to 40,000 barrels of oil per day from 20,000, while increasing output from its project with Delta Petroleum in Monagas state from 40,000 to 100,000 barrels per day.
The deal also contemplates the transfer of knowledge in water injection techniques in the oil production process from the Indian firm to its Venezuelan counterpart.
"It is very important for Venezuela to strengthen our oil industry under the Oil Sowing Plan. In the last 16 months, our country has received US$10.7 billion dollars in investments to expand oil production by 855,000 barrels (daily),” said President Maduro from the Miraflores Presidential Palace where the deals were signed on Friday.
Explaining the investment to stakeholders, Eulogio del Pino emphasised the “strategic nature” of the company’s alliance with India, given the South Asian country’s increasing involvement in oil refinery construction and its growing levels of national consumption.
Venezuela currently sends around 300,000 barrels per day to India and is the South Asian country’s fourth largest supplier of crude oil. Del Pino said that the company was aiming to double its shipments to India in the long term.
In a news report on its website, PDVSA explained that its planned production increase would allow the company to “pay short and long term loans,” fulfil its tax and royalty obligations in Venezuela, and “generate profits for shareholders”.
In October, the company narrowly averted a default on its debt payments after managing to negotiate a bond swap with over half of its creditors.
The country is currently facing an economic crisis caused by the collapse of global oil prices in 2014, which has severely dented national income.
Revenue from oil accounts for approximately 95% of Venezuela’s earnings from exports.