Venezuela's declining oil production mirrors low investment
State-run oil firm Petróleos de Venezuela (Pdvsa) pushes plans to achieve ambitious goals in an election year
Venezuela has the world's largest oil reserves in the Orinoco Oil Belt and the price of oil has increased by 17% since 2008. However, these two facts have not led to a steady increase in oil output. Both delayed implementation of the 2010-2015 Oil Sowing Plan and the global economic crisis have hit Pdvsa's oil production.
The 2010-2015 Oil Sowing Plan is entering its second year and Pdvsa has set the goal to increase oil production by 17% to 3.5 million barrels per day.
For this purpose, the Venezuelan government adopted a "special USD 5 billion budget" that was announced by President Hugo Chávez following a request by Minister of Petroleum and Mining Rafael Ramírez.
However, Pdvsa has spent nearly 18 months seeking to raise production -including a six-month plan called Tricolor Plan-, and trying to boost oil projects in the Orinoco Oil Belt.
Revenues and results
Despite high oil revenues, Venezuela lacks an adequate investment plan to boost production, said José Guerra, ex-manager of economic research at the Central Bank of Venezuela (BCV).
"Pdvsa's investment level is very low. Investments in oil exploration and production does not even reach 1% of revenues, while oil giants spend between 2% and 3% of their revenues" in that area, Guerra said.
Venezuela planned to invest USD 18.36 billion in 2011 to develop the oil industry as part of the Oil Sowing Plan. However, the South American country only invested USD 12 billion, according to data from the Ministry of Petroleum and Mining. This total is less than 66% of the funds initially projected.
On the other hand, this amount is only 4% higher than investments in 2010, when the Venezuelan oil industry allocated USD 11.5 billion to investments.
According to the business plan released by the Venezuelan oil company in mid-2011, Pdvsa aims to produce 3.24 million bpd by 2012 -an election year.
Translated by Gerardo Cárdenas
A group of some 60 Venezuelan economists from across the country and from different generations and backgrounds, has met regularly in the past couple of years and now has brought forth a document explaining the reasons of the current emergency and outlining specific proposals on how to address the serious economic crisis the country has plunged into over the last three years.