MARIANNA PÁRRAGA
EL UNIVERSAL

From USD 5.93 billion budgeted for 2006, Venezuelan state-run oil firm in 2007 plans to increase investments by almost 70 percent to USD 10 billion, said the corporation in its updated business plan through 2012, which was disclosed together with the prospectus related to the recent issue of PDV bonds.

Based on the financial data published in the prospectus, most investments will be devoted to gas projects, at USD 3.4 billion this year versus USD 1.22 billion in 2006. Overall, through 2012 the conglomerate is earmarking USD 16.19 billion for investment in gas projects.

"Pdvsa's activities in the gas sector are targeting promotion of domestic consumption in order to shore up development and better living standards. Pdvsa expects to expand its distribution network, as well as natural liquefied gas extraction and processing capacity, including gas exports," the document said.
   
The second largest item in 2007 budget is intended to maintain and expand production. Disbursements for these purposes are estimated at USD 2.91 billion. This item represents 17.4 percent of USD 16.69 billion to be invested in production through 2012.

Finally, funds available for the area of supply and marketing are to climb significantly from only USD 4 million in 2006 to USD 1.17 billion in 2007, and they will amount to USD 2.04 billion ending 2012.

Bubbling
Based on Pdvsa's updated business plan, funds for the firm's so-called Oil Sowing Plan (investment plan) for 2005-2012 increased from USD 56 billion, as estimated in 2005, to USD 77.34 billion.

This increase exceeding USD 21 billion or 38 percent is the result of the inclusion of a significant number of new projects, as well as increased oil industry-associated costs -a situation that has started to raise the alarm among crude oil producers.

According to Pdvsa plan, out of the USD 77.34 billion budgeted in its Oil Sowing Plan USD 20 billion will be in the form of private direct investment through 2012 or 25.85 percent.

The major goal is to increase Venezuelan average oil production to 5.8 million bpd within the next five years. That is the reason why this is the largest item in the budget at USD 16.69 billion through 2012.

Based on Pdvsa's figures, in 2005 the Venezuelan oil giant drilled 2.9 million bpd of crude oil, including its average 40 percent stake in strategic partnerships at the heavy-crude oil Orinoco Belt. Therefore, overall crude oil output in Venezuela averaged 3.27 million bpd -a slight increase of 126,000 bpd (4 percent) compared to 2004- plus 165,000 bpd of liquefied natural gas.

Investment in new Orinoco Belt projects is the second largest item in the plan at USD 16.46 billion, with investments starting as of 2008. Third, there are oil-refining projects at USD 16.28 billion and in the fourth position there are Pdvsa gas projects at USD 16.19 billion.

The most intensive year in terms of investments is likely to be 2009, with a total of USD 15.02 billion, almost trebling Pdvsa's investment in this area in 2006, based on preliminary figures. However, in 2008, investments are also expected to raise significantly to USD 14.6 billion from USD 10.07 billion in 2007, a 45 percent increase.

Translated by Maryflor Suárez R.
msuarez@eluniversal.com

Marianna Parraga
EL UNIVERSAL