Oil and gas
BMI has said that it maintains a cautious outlook for Venezuela’s oil and gas sector despite vast below ground potential and ambitious production plans by state owned PDVSA. BMI expects the country to continue to underperform given the large scope of operational challenges, such as political interference, chronic underinvestment, an unattractive operating environment and a precarious financial situation facing the dominant national oil company. Also, the sustained fall in global oil prices will further deteriorate production growth prospects as both PDVSA and international investors face declining revenues and a reduction in available capex funds.
BMI’s production forecast for crude and other liquids has declined, resulting in a -2.3% average yearly decline through to 2018 as previously planned developments fail to come online within a lower oil price environment. Also, BMI has noted a continued underperformance in oil production as a result of chronic underinvestment, deficient infrastructure, and a lack of maintenance to existing facilities.
When it comes to gas, BMI expects production to rise on an average of 2.4% over the coming decade, but this will continue to fall short of the country’s total consumption demands. The closure of the Trans-Caribbean pipeline will also mean that the country will suffer from a deficit of natural gas as it struggles to produce vast reserves. BMI has also commented that rising public debt and soaring inflation, now at 63.4% year on year will make it increasingly difficult for PDVSA to operate as it faces declining revenues in the wake of sustained lower oil prices.
BMI has said that progress on the expansion of the Venezuelan petrochemicals industry has been slow and undermined by the government’s policy in upstream sectors that provide feedstock and its general indifference to improving the investment climate. The country is going to be unable to move towards self sufficiency under the current business environment in which the government has assumed a high degree of managerial control and intervention in the economy. There were however, according to BMI, high hopes that strong projected growth in oil and gas output would support investment in the petrochemicals sector, but these have largely been quashed and expansion programmes are largely limited to fertilisers.
Edited from report briefs by Claira Lloyd
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/27022015/oil-gas-petchem-bmi-venezuela/