Oil joint ventures operating in Venezuela seek USD 14 billion

A dozen joint ventures operating in mature oil fields in Venezuela are pondering a new mechanism that would oxygenate their tight cash flow and would allow them to obtain fresh capital from parent companies or private banks to invest in the next five years.

The companies seek to raise USD 14 billion in external funding to reverse the trend of declining or stalling oil production in Venezuelan oil fields, a source involved with the plan, who declined to be named, told Reuters.

Spanish oil company Repsol-YPF, Royal Dutch Shell and Brazilian federal oil company Petroleo Brasileiro (Petrobras), which are minority partners of state-run oil holding Petróleos de Venezuela (Pdvsa) in several joint ventures, are among the oil firms seeking to reverse the trend of declining or stalling oil production in Venezuelan ancient oil fields, which require substantial investments.

One of the major obstacles to raise investment capital is the lack of free cash flow. Since Pdvsa is the majority partner, it manages the accounts of all joint ventures. Therefore, private shareholders only collect dividends at the end of each fiscal year, Reuters reported.

In addition to this, the increase in the oil windfall tax and red tape hit a round of credit launched by joint ventures late in 2010 to compensate for declining production in Venezuela's traditional oil fields.

About 20 joint ventures operating mature oil fields in Venezuela have a production capacity of about 400,000 bpd, but unofficial sources claim that production is well below that figure.