PDVSA reevaluates its foreign operations to maximize revenue. Chavez proposes higher OPEC oil price band

A rise of $3-$4 in Opec's oil price band, and focusing on improving the processing of abundant heavy and extra-heavy crude oil, among th eoil giant's efforts to increase revenue.

Caracas, Oct. 2.- According to the president of the state oil giant PDVSA, Alí Rodriguez Araque, the company has been evaluating the situation of all his the businesses and investments, and based on it, the are making decisions with regard to its refineries located outside the country, and some filial companies, with the goal to reduce costs and increase the benefits for the company and the country.

The board of directors is evaluating PDVSA’s businesses outside the country, as it is the case of its refinery in Germany.

Rodriguez said that in spite of the abundance of heavy and extra-heavy petroleum in Venezuela, PDVSA under previous administrations never planned the construction of systems and the infrainstructure for the refinement for this type of oil, which was the case of the refineries located in Germany.

We are looking to align our refineries in Germany with the objectives of the corporation, such as the processing of Venezuelan heavy and extra-heavy crude. Venezuela has the biggest reserves of heavy and extra-heavy crude oil in the world.

The present Board of directors of PDVSA is committed to optimize the costs and operations, thus they are thoroughly studying the true benefits that some branches and even processes, really are offering to the company and to the country.

Rodriguez said that for years the corporation experienced and exaggerated growth branching out without control, to the point in which it had 189 companies and even “paper companies”, as well as an exaggerated roster of human resources concentrated in Caracas.

“This growth generated more costs than benefits for the company as well as for the country, which contrasts with the worldwide tendencies in which big corporations try to reduce costs,” said Rodriguez.

In the case of the Bitor branch, their functions were transferred to PDVSA East division, and the Orimulsion (a processed kind of heavy oil) agreements with foreign clients will be honored. “The new PDVSA has conducted a deep investigation on the profitability of this business and the analyses demonstrate that their rentability and its contribution to the state treasury are very low.

– There are very solid reasons for us to have made the decision that we took, added Rodriguez Araque.

PDVSA through its Research and Technological Support Center, Intevep, “is in the the serach for the improvement of heavy and extra-heavy crude, to fulfill the strategic target adding value to them. That requires our own effort, with associations or agreements with others”.

Pilot oil fields in India

Intevep representative and leader of the Amarras Project in India, Rachid Chedid, said that the survey of oil deposits in the Indian region of Rajasthan is in its last phase, and that after completion they will make a proposal to install pilot oil fields and present a design for production infrastructure.

The Amarras Project surveys existing oil fields in the India-Pakistan border.

Oil India Limited has described the results of Intevep’s surveys as “positive”. Venezuelan Ambassador to India, Walter Marquez, visited Intevep’s headquarters to get a sense of the state of the agreements and activities carried out until now between Intevep and the Indian oil company.

Higher OPEC price band

President Hugo Chávez said last Wednesday that Venezuela has asked other members of Opec to consider a $3-$4 rise in the oil cartel’s band or range of prices which stands right now at $22-$28 a barrel. Chavez based the proposal on the producing countries’ drop of revenue because of the production cuts imposed by the cartel.

Some analysts have said that other Opec members are likely to reject Venezuela’s proposal.

Facing extremely low oil prices, Venezuela under Chavez’s leadership, proposed the existing price band system to other members of Opec in 2000 as part of the government’s strategy to increase revenue for the country.

Information from Venpres has been used in this news piece.