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China pulls Out Canada OS & into Venezuela investments

Home Forums Coking News: DCU, Upgrader 3.Upgrader (registered users only) China pulls Out Canada OS & into Venezuela investments

This topic contains 4 replies, has 1 voice, and was last updated by  Charles Randall 8 years ago.

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  • #2203

    basil parmesan
    Participant

    China explains Move Out of Canada, into Venezuela

    Chinese Chill
    CNPC executive announces Chinas exit from the Gateway Pipeline Project

    Andrea W. Lorenz July 2011
    China has dramatically altered its international investment policy, pulling back on its plans for direct participation in Canadas oilsands and withdrawing its support for Enbridge Inc.s $4-billion Gateway Pipeline Project to deliver bitumen and synthetic crude oil to the west coast.
    At a July oilsands forum in Calgary hosted by TD Newcrest, Yiwu Song, vice-president of CNPC International (a subsidiary of the China National Petroleum Corp.), outlined the changes along with Chinas reasons for re-evaluating its enthusiasm for the oilsands: projects, he said, take too long to get off the ground and the political environment here frustrates Chinese investors.
    Songs comments to a stunned audience followed hard on the heels of a presentation by David Roberts, Marathon Oils senior vice-president, business development, who said that while there were challenges associated with developing Canadas oilsands, those were mitigated in large part by Canadas advantage as being one of the more politically benign places to invest in the world.
    From the tone of Songs presentation, however, China does not hold the same view on Albertas oilsands.
    To us, its just the opposite, he said. Thats why we changed our minds about investing in the oilsands. His company now classifies the oilsands business as comparable in difficulty to deepwater drilling.
    In his presentation, Song said Chinas strategy as it pertains to Canadian investment opportunities would follow a new direction:
    1. Slow down its involvement in the Canadian oilsands business.
    2. Give up its involvement in the Gateway pipeline project.
    3. Wait for better investment policies and politically friendly opportunities coming in the future.
    CNPCs earliest projection for producing bitumen from Albertas oilsands remains a decade in the future, Song said, making it clear that Chinas near-term strategies are pointed directly at Venezuela, where a warm-hearted President Hugo Chavez has taken steps to nationalize oil operations.
    Under the new regime, Venezuela expects heavy oil exports to China to rise to 600,000 barrels per day within a few years, and CNPC is now focused on building a pair of upgraders to process that crude.
    Not surprisingly, Songs announcements were greeted with surprise by most in the audience.
    Steven Gilliland, executive vice-president of operations for Synenco Energy, said it was the first hed heard of a shift in Chinese policy. Synenco is developing the Northern Lights oilsands project, in which Sinopec, another state-run Chinese company, holds a 40 per cent interest.
    Greg Stringham, vice-president, government affairs for the Canadian Association of Petroleum Producers, was also surprised. Thats news to me, he said. He thought the announcement was especially puzzling given that in January, CNPC purchased 258.6 square kilometres of oilsands acreage estimated to hold two billion barrels of bitumen.
    Still, he said, CAPP had received a heads up that official Chinese policy towards investment in the Canadian oil patch was changing course. He recently saw a list of 10 or 12 countries of interest for Chinese investment, he said, and Canada was on the list for 2005 and 2006, but it was not on the list for 2007.
    Significantly, Song made it clear that CNPCs frustration with the inability to move Enbridges pipeline forward played a large part in its overall decision.
    We have decided to give up our involvement in the Gateway Pipeline Project, he told a scrum of reporters following his presentation. We didnt renew the MOU [Memorandum of Understanding] with Enbridge. We took the decision last year.
    Earlier, Enbridge executive vice-president Richard Bird told the forum that Gateway plus the second phase of Alberta Clipper [to deliver Alberta crude to U.S. Gulf Coast refinery markets] are still in planning.
    He said nothing of the Chinese decision to pull out of the pro-ject, but did say that the project has been postponed until post-2011. Enbridge did not return phone calls seeking clarification.
    Songs presentation included an invitation to the audience to invest in China. He described his companys vast reach across the globe, its rapidly expanding production and its newly developed engineering and technical services divisions.
    Describing the state-run company as a unique integrated energy syndicate, he said CNPC runs 69 projects in over 26 countries and has built more than 20 refineries. Its 1.3 million employees work in more than 500 enterprises.
    CNPCs estimated recoverable reserves are 19.7 billion barrels of oil and 78.3 trillion cubic feet of gas. It operates 21,000 kilometres of natural gas pipelines, 10,941 kilometres of crude pipeline and 19,207 gas service stations, and currently produces 2.7 million barrels a day of crude oil and 4.6 billion cubic feet a day of natural gas.
    Two slides in Songs presentation showed plainly that China is focusing its efforts to build energy security for its people not necessarily in North America but in what he described as politically friendly countries.
    Judging from presentation slides showing CNPC officials smilingly engaged with Chavez, Saudi Arabian King Abdullah, Russian President Vladimir Putin, and other Asian and African leaders, those efforts are going just about everywhere in the world but North America.
    In his remarks to reporters following his speech, Song described in detail the reasons for CNPCs frustration.
    Here you need a very long time, he said. It takes three years just to start up a pipeline. The situation keeps changing. Were fed up already.
    Evincing a treadmill, he spun his hands one over the other, and added, Im not angry with Enbridge. We started discussions three years ago. Up to now nothing happened. You just put a lot of money for nothing. CNPC just doesnt understand this.
    He noted that CNPC saw Enbridges need to consult with more than 30 First Nations along the pipelines right-of-way as a major stumbling block. Enbridge cannot overcome this kind of First Nation issue, he said. We cannot play this game for too long. We are very sorry for Enbridge.
    Songs message then became conciliatory. We sincerely want to do something, he said. However, he followed that with an unsparing critique of Prime Minister Stephen Harpers China policy.
    The government of Paul Martin was more positive. Thats for sure. The key word is uncertainty. I just want your government to get this message.
    During his presentation, Song noted that CNPC has good working relationships with major integrated IOCs (international oil companies) including Total, BP, Shell Rozneft and Gazprom, and Canada, he said, would be well advised to establish a comparable IOC.
    Such organizations, his presentation noted, offer international operation experiences, technologies, value chain management, and [avoidance of] sensitive issues.
    Before being pulled away from the press scrum by an assistant, Song offered this advice: You need a very organized, integrated plan. He added, Your people need time to know the new China.
    Synencos Gilliland shed some light on the challenges of dealing with a Chinese state-owned company. Its a command and control government, he said.
    Still, Synenco has forged an excellent working relationship with its partner on the Northern Lights Project, SinoCanada Petroleum Corp. (a division of Sinopec).
    SinoCanada now has five secondees embedded in the project, and the companys engineering arm is also participating in the design of a proposed 100,000-barrels-per-day upgrader in Sturgeon County near Edmonton.
    One reason the relationship has worked so well, Gilliland said, is that Sinopec was very aggressive, and their approach was very westernized.
    Sinopec succeeded in fast-tracking its own procedures in a process that its Canadian partners found exceptionally efficient. They spent one and a half months doing their due diligence, Gilliland noted. Thats a pretty westernized timeline.
    Even so, the Northern Lights Project is dogged by some of the frustrations that Enbridge faces with its Gateway Pipeline.
    Synenco recently had to take a time out from the regulatory process involved in building the upgrader. The increase in cost to $6.3 billion from $5.3 billion requires that the partners reconfigure their engineering plans, he said.
    Gilliland described soaring costs as the elephant in the room. He noted that capital costs for Greenfield upgraders currently range between $43,000 a barrel for 200,000 barrels-per-day facilities to $63,000 per barrel for 100,000 barrels-per-day plants, while greenfield mining and extraction projects range between $38,000 and $48,000 per barrel.
    One of the other difficulties Synenco and other new oilsands players face is finding equipment manufacturers with space and resources to fill their orders.
    Ideally, Synenco would place its orders with a shop in Edmonton, Gilliland said, but everyone is full up until 2014. We could maybe find shops in the U.S. but theyre pretty full up.
    Instead, the company has designed a bold plan to have its equipment fabricated in Asia and shipped across the Pacific and up the Mackenzie River. Synenco plans to ship 40 modules, some weighing as much as 2,000 tons, over a three-year period, although the fabrication and shipping schedule remains uncertain.
    How serious is CNPCs threat to move its investment focus away from Canadas oilsands? Gilliland described the message as what I call Chinese Greek speak, and he cautioned, Dont read anything into it other than what is on the slide.
    Despite Yiwu Songs blunt criticism, Canadian heavy crude is already making its way to China. Kinder Morgan Canada president Ian Anderson said that two or three tankers had been routed recently to China in test runs.
    New refineries there are designed to process increasing volumes of heavy crude arriving from Venezuela and even Saudi Arabia, and the Chinese are now experimenting with various assays of Canadian crude.
    Kinder Morgan moves five vessels a month, each one carrying between 500,000 and 550,000 barrels of crude, from its docks in Vancouver. Most head to ports in California and Washington, but some are destined for markets in Asia.
    Anderson explained that it is difficult to track exactly where the cargoes end up because, once they hit water it becomes almost a virtual market, with a shipment changing course depending on where its buyers are located. Still, its clear that Chinese refiners are testing the compatibility of Canadian crude.
    Whether the volume of Canadian heavy oil shipped to China increases depends on whether these blends are economic for them and on their appetite for them, said Anderson.
    Another executive with a major Canadian company, who asked not to be identified, concurred. Be careful that they are not using you [the press], he warned.
    Songs criticisms may just be political theatrics, he said, adding, Chinese companies have been given the mandate to go out and find oil and gas resources across the world and to sew up deals as fast as they can. Instead of taking the traditional 1,000 year view, now they want things done in 1,000 days.
    CNPC at a glance
    Number of employees:
    1.3 million
    Number of international ventures:
    69 projects in over 26 countries
    Number of refineries: 20
    Recent purchases from Canadian-owned entities:
    PetroKazakhstan for US$4.1 billion
    EnCana Ecuador (55 per cent) for US$1.4 billion
    PetroCanadas Syrian assets (50 per cent) for US$574 million

  • #4977

    Charles Randall
    Participant

    Argus: PdV plans $12.89bn capex for refinery ventures
     
    Caracas, 5 August 2011 (Argus) – Venezuelan state-owned oil company PdV plans to make $12.9bn in capital expenditures (capex) over the coming nine years in refinery joint ventures with state-owned oil companies in Cuba and China.
    PdV’s audited annual report for 2010 said that its planned capex of $6.4bn in Cuba will more than quadruple the Caribbean island nation’s crude oil refining capacity to 400,000 b/d by the end of 2015, up from 87,000 b/d now.
    State-owned Cupet of Cuba will own 51pc of the ventures, with PdV holding the rest. But China’s state-controlled CNPC also will participate as a minority stakeholder, according to the annual report.
    The Cienfuegos refinery’s crude oil processing capacity will increase to 150,000 b/d from 65,000 b/d currently by the end of 2014. PdV estimates its share of the required capex at almost $2.39bn.
    In the same period, crude oil processing capacity at the Hermanos Diaz refinery in Santiago de Cuba will be increased to 50,000 b/d from 22,000 b/d, PdV’s annual report says. PdV’s share of the capex is $314mn.
    PdV and Cupet also plan to build a new refinery in Matanzas with a crude oil processing capacity of 150,000 b/d, PdV’s annual report said. The facility would come on stream by 2016 and cost PdV more than $3.75bn.
    PdV also plans to spend $6.5bn in China from 2011-2019 to build three refineries with a combined crude oil processing capacity of 800,000 b/d. PdV will hold 40 pc stakes in the planned Chinese refineries, which are to be integrated with 600,000 b/d worth of PdV’s Orinoco heavy oil production ventures in Venezuela with state-controlled CNPC and Sinopec.
    PdV’s planned refineries in China include the 400,000 b/d Nanhai refinery in Jieyang, which is expected to start operations in 2014. PdV’s share of projected capex is $3.3bn.
    The 200,000 b/d Weihai refinery is scheduled to start operations in 2016, and the 200,000 b/d Shanghai refinery is slated to come on line in 2019, with PdV’s share of capex coming to $1.6bn for each facility.
    PdV signed JV agreements in 2010 with CNPC and Sinopec to develop 600,000 b/d of Orinoco extra-heavy crude production capacity by 2017 in the oil belt’s Junin 4 and Junin 8 blocks.
    The PdV-CNPC venture PetroUrica plans to produce 400,000 b/d of Merey 16 API blended crude for export to the Jieyang refinery in China’s Guandong province. PdV has estimated total capex for PetroUrica, of which it owns 60pc, at more than $20bn and expects 50,000 b/d of production to begin by 2013, with peak capacity being reached by 2016.
    PdV and Sinopec are negotiating terms of a venture to develop initial capacity of 200,000 b/d of extra-heavy crude production in the Orinoco belt’s Junin 8 block.
    Sinopec also holds a 30pc stake in PdV’s planned Cabruta refinery, which is slated to start upgrading 221,000 b/d of extra-heavy crude by 2017. PdV estimates at total capex to build the Cabruta refinery’s upgrader at $8.3bn.
    Second- and third-stage expansions to make Cabruta an integrated upgrader, refinery and petrochemicals complex will be completed by 2022 and 2027, respectively, for additional projected total capex of more than $6bn.

  • #4976

    Charles Randall
    Participant

    Here was update Argus about PdV & China projects  – decided to post  ( at first didnt want to talk about PDVSA using US assets & former crude discoveries/partner reserves to supply Cuba & China)!

    There have been lot announcements about both Cuba projects & China involvement but very few examples of steel going into the ground (at least for VZ based projects). Having
    China getting involved with Cuba is going to raise security issues with US at some point and maybe even start pressing case on Chavez privatization Oil Companies.

    See earlier post that Petrobras postphoned its North Refineries for couple years (that PDVSA kept trying to get alternate supply for out this Junin 8 block)? Probably why Sinopec/CNPC pulled into area as well since the new Bitumen plant to make Orimulsion in China is up and running on first increments planned.

  • #4975

    Charles Randall
    Participant

    There is also a ~5th Upgrader for PdVSA in works with another Asian Group as partners in works (didnt post yet).
     
    Havent heard anything new/more development on it  – It was deal Apr/May 2010 between Pdvsa-Inpex Carabobo JV (CVX 37%,Pdvsa 60%-natch, Mitsubishi/Japan 5%). There is PDF out about news release if you want check on it.
     
    Although with CVX at 37% you have to ask if Chevron boys are smoking Tar out VZ  – guess CVX & Total havent got enough of asset lost from first set of Upgrader privatizations.
     
    Pdvsa getting Asians (China & Japan) “snookered” in for second round Upgraders – probably for coking cycle after the current one (2012-2017) could put more 4.5%S Upgrader fuel coke back on market just after current & last coker cycles (2006-2011 & 2012-2017) have the full production volumes of 6.5%S finally drive price for 4.5%S back to premium ranges of +$25/mt deltas – but only to come down again as volumes again fight for placement!

    But the 2018+ coking cycle is long way off and PdVSA has not been known for keeping fair or good relationships with its past investors. (Check with Oil, Cement, Fertilizer & ect industries they privatized investment assets) 

  • #4969

    Charles Randall
    Participant

    Special report: Pension scandal shakes up Venezuelan oil giant
    By Marianna Parraga and Daniel Wallis
    CARACAS | Wed Aug 17, 2011 9:08am EDT
    CARACAS (Reuters) – Venezuela received an enviable honor last month: OPEC said it is sitting on the biggest reserves of crude oil in the world — even more than Saudi Arabia.
    But the Venezuelan oil industry is also sitting atop a well of trouble.
    The South American nation has struggled to take advantage of its bonanza of expanding reserves. And a scandal over embezzled pension funds at state oil company PDVSA has renewed concerns about corruption and mismanagement.
    Retired workers from the oil behemoth have taken to the streets in protest. Their beef: nearly half a billion dollars of pension fund money was lost after it was invested in what turned out to be a Madoff-style Ponzi scheme run by a U.S. financial advisor who was closely linked to President Hugo Chavez’s government.
    The fraud case centers on Francisco Illarramendi, a Connecticut hedge fund manager with joint U.S.-Venezuelan citizenship who used to work as a U.S.-based advisor to PDVSA and the Finance Ministry.
    Several top executives at PDVSA have been axed since the scandal, which one former director of the company said proved Venezuela under Chavez had become “a moral cesspool.”
    Pensioners are not the only ones still wondering how such a large chunk of the firm’s $2.5 billion pension fund was invested with Illarramendi in the first place.
    The question cuts to the heart of the challenges facing PDVSA, one of Latin America’s big three oil companies alongside Pemex of Mexico and Brazil’s Petrobras.
    The Organization of the Petroleum Exporting Countries issued a report last month showing Venezuela surpassed Saudi Arabia as the largest holder of crude oil reserves in 2010.
    PDVSA is ranked by Petroleum Intelligence Weekly as the world’s fourth largest oil company thanks to its reserves, production, refining and sales capacity, and it has been transformed in recent years into the piggy-bank of Chavez’s “21st Century Socialism.”
    The timing of the scandal is not good for Chavez: the charismatic, 57-year-old former coup leader underwent cancer surgery in Cuba in June and is fighting to recover his health to run for re-election next year. He needs every cent possible from PDVSA for the social projects that fuel his popularity.
    MULTI-TASKING
    The company does a lot more than pump Venezuela’s vast oil reserves. Tapped constantly to replenish government coffers, PDVSA funds projects ranging from health and education to arts and Formula One motor racing. From painting homes to funding medical clinics staffed by Cuban doctors, the restoration of a Caracas shopping boulevard and even a victorious team at the Rio carnival, there’s little that PDVSA doesn’t do.
    Jeffrey Davidow, a former U.S. ambassador to Venezuela who now heads the Institute of the Americas at the University of California, San Diego, points to the occasion when PDVSA senior executives turned down invitations to a regional energy conference at the last minute back in May, saying they were too busy because of PDVSA’s leading role in the government’s “Gran Mission Vivienda” project. It aims to build two million homes over the next seven years.
    “In poorly-managed societies, national oil companies tend to be the most efficient organizations, so the government gives them more work to do, instead of letting them focus on being better oil companies,” Davidow told industry executives in the ballroom at a luxurious La Jolla hotel.
    That’s the kind of criticism that Chavez, who has nationalized most of his country’s oil sector since he was elected in 1999, says is rooted in a bankrupt “imperial Yankee” mind-set.
    He purged perceived opponents from PDVSA’s ranks in response to a crippling strike in 2002-2003 that slashed output, firing thousands of staff and replacing them with loyalists. Since then, the company has endured one controversy after another.
    There was the “maleta-gate” affair in ****, so-called after the Spanish word for suitcase, when a Venezuelan-American businessman was stopped at Buenos Aires airport carrying luggage stuffed with $800,000 in cash that U.S. prosecutors said came from PDVSA and was intended for Cristina Fernandez’s presidential campaign in Argentina. Both Fernandez and Chavez denied the charge.
    There have also been persistent allegations by industry experts and international energy organizations that Venezuela inflates its production statistics — which PDVSA denies — and a string of accidents, including the sinking of a gas exploration rig in the Caribbean last year and a huge fire at a giant oil storage terminal on an island not far away.
    In a big blow to its domestic popularity, tens of thousands of tons of meat and milk bought by PDVSA’s importer subsidiary, PDVAL, were left festering in shipping containers at the nation’s main port last year, exacerbating shortages of staples on shop shelves. Opposition media quickly nicknamed the subsidiary “pudreval” in a play on the Spanish verb “to rot” – “pudrir“.
    In an apparent damage-limitation exercise after the pension scandal, five members of the PDVSA board were relieved of their duties in May, including the official who ran the pension fund. They were replaced by Chavez loyalists including the country’s finance minister and foreign minister.
    Gustavo Coronel, a former PDVSA director in the 1970s and later Venezuela’s representative to anti-graft watchdog Transparency International, said the fraud had been going on right under the noses of the PDVSA board.
    “What this scandal shows is that Venezuela has become a moral cesspool, not only restricted to the public sector but to the private sector as well,” he wrote on his blog.
    “Money is dancing like a devil in Venezuela, without control, without accountability. Those who are well connected with the regime have thrown the moral compass by the side Venezuelan justice will not move a finger. Fortunately, U.S. justice will.”
    SHOW ME THE MONEY
    U.S. investigators say Illarramendi, the majority owner of the Michael Kenwood Group LLC hedge fund, ran the Ponzi scheme from 2006 until February of this year, using deposits from new investors to repay old ones. He pleaded guilty in March to multiple counts of wire fraud, securities and investment advisor fraud, as well as conspiracy to obstruct justice and defraud the U.S. Securities and Exchange Commission. He could face up to 70 years in prison.
    By those outside the circles of power in Venezuela, Illarramendi was seen as one of the “Boli-Bourgeoisie” — someone who was already wealthy but grew much richer thanks to the “Bolivarian Revolution,” named by Chavez after the dashing 19th century South American independence hero Simon Bolivar. In one widely-circulated image, Illarramendi is seen overweight and balding, wearing a dark blue overcoat and clutching a blue briefcase as he left federal court in Bridgeport, Connecticut after pleading guilty.
    An ex-Credit Suisse employee and Opus Dei member in his early 40s who lived in the United States for at least the last 10 years but traveled frequently to Venezuela, Illarramendi is on bail with a bond secured on four U.S. properties he owns.
    He was close to PDVSA board members and Ministry of Finance officials, but is not thought to have known Chavez personally. The son of a minister in a previous Venezuelan government, Illarramendi did enjoy some perks — including using a terminal at the capital’s Maiquetia International Airport normally reserved for the president and his ministers, according to one source close to his business associates.
    His sentencing date has not been set yet, but a receiver’s report by the attorney designated to track down the cash is due in September. In June, SEC regulators said they found almost $230 million of the looted money in an offshore fund.
    That was just part of the approximately $500 million Illarramendi received, about 90 percent of which was from the PDVSA pension fund, according to the SEC.
    PDVSA has assured its former workers they have nothing to worry about, and that the money will be replaced. But what concerns some retirees are allegations the company may have broken its own rules for managing its pension fund, which should have provided for more oversight by pensioners.
    A representative of the retirees should attend meetings where the use of the fund is discussed, but no pensioners have been called to attend such a meeting since 2002.
    PDVSA’s investment in capitalist U.S. markets may seem to be incongruous given the president’s anti-West rhetoric, but the scale of such transfers is not known, and the investment options for such funds at home in Venezuela are sharply limited, not least by restrictive currency controls.
    Energy Minister Rafael Ramirez told Reuters that Illarramendi only had an advisory role with PDVSA, and that it ended six years ago. So quite how he came to be managing such a big chunk of the pension fund is a hotly debated topic. Ramirez said the pension fund had been administered properly, and that the losses were of great concern to the company.
    In July, PDVSA boosted pension payments to ex-employees by 800 bolivars a month, or about $188. The government also allocated nearly half the income from a new 2031 bond issue of $4.2 billion to the company’s pension fund — probably to replenish deposits lost in the scandal.
    Still, ex-PDVSA worker Luis Villasmil says his monthly stipend barely meets the essentials for him, his wife, a diabetic son and a niece. One morning in April, he rose early and met several dozen other PDVSA retirees to march in protest to the company’s local headquarters in Zulia, the decades-old heartland of Venezuela’s oil production.
    “I never thought we would be in this situation,” the 65-year-old told Reuters with a sigh. “I think PDVSA should show solidarity with the retirees and pay their pensions whatever happens because it is responsible. But that’s not the heart of the issue, which is to recover the money if possible.”
    Ramirez, who once proclaimed that PDVSA was “rojo rojito” (red) from top to bottom, says the firm’s 90,000 staff have nothing to worry about. “Of course we are going to support the workers,” he told Reuters in March. “We will not let them suffer because of this fraud. We have decided to replace it (the lost money) and to make ourselves part of the lawsuit (against Illarramendi).”
    ORINOCO FLOW
    The latest scandal comes at a time when observers are focused on the future of PDVSA, given Chavez’s uncertain health, next year’s election and OPEC’s announcement on reserves.
    The producer group said in July that Venezuela leapfrogged Saudi Arabia last year to become the world’s no.1 reserves holder with 296.5 billion barrels, up from 211.2 billion barrels the year before.
    “It has been confirmed. We have 20 percent of the world’s oil reserves … we are a regional power, a world power,” Chavez said during one typical recent TV appearance, scribbling lines all over a map to show where planned refineries and pipelines to the coast would be built.
    The new reserves were mostly booked in the country’s enormous Orinoco extra heavy belt, a remote region of dense forests, extraordinary plant life and rivers teeming with crocodiles and piranhas.
    And there lies the rub. Not only is the Orinoco crude thick and tar-like, unlike Saudi oil which is predominantly light and sweet, it is also mostly found in rural areas that have little in the way of even basic infrastructure. It costs much more to produce and upgrade into lighter, more valuable crude.
    So hopes now rest on a string of ambitious projects that Venezuela says will revitalize a declining oil sector, eventually adding maybe 2 million barrels per day (bpd) or more of new production to the country’s current output of about 3 million bpd, while bringing in some $80 billion in investment.
    The projects are mostly joint ventures with foreign partners including U.S. major Chevron, Spain’s Repsol, Italy’s Eni, Russian state giant Rosneft and China’s CNPC, as well as a handful of smaller companies from countries such as Japan, Vietnam and Belarus. Even after the nationalizations of the past, investors clearly want a seat at the Orinoco oil table.
    In June, Ramirez announced new funding for Orinoco projects this year of $5.5 billion through agreements with Chinese and Italian banks.
    The question remains: will PDVSA have the operational capacity required as the lead company in each project, and will it be able to pay its share?
    “Processing that extra heavy crude requires a lot of capital and equipment, and the climate is not good for that at the moment,” said one regional energy consultant who has worked with PDVSA and asked not to be named.
    There may be billions of barrels in the ground, but the pension scandal will only underline the risks going forward for foreign companies with billions of dollars at stake.

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