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VENEZUELA PRESENTATION:

Opportunities vs Challenges
Benefits vs Risks

Luis Quirós – UKTI Caracas


luis.quiros@fco.gov.uk

Port of Spain - January 27th, 2010


Venezuela UKTI
 Introduction to Venezuela Oil & Gas Industry

 Areas of Developments and Major Projects

 Business Opportunties
E&P Crude Oil Projects

Refining Circuit

Gas Developments

Social Projects (NUDE y Apoyo Social)

 Challenges

 Conclusions and Coming Events

Venezuela – UK Technology Workshop


Billion of barrels
Worldwide Outlook: Oil Reserves

Tar Sands
17
Oil Sands and
Conventional Oil Bitumen
30% 30%
Reserves
Source: Energy Information Administration (EIA), MPPENPET

Extra Heavy Oil


Heavy Oil 25%
15%
90%
90% of the production is from conventional oil
Heavy oil and bitumen production are growing rapidly
Canada and Venezuela together have >35% 35% of the Conventional Oil >25°API
non--conventional oil reserves
non Heavy Oil <25°API
Extra Heavy <10°API
Oil Sands and Bitumen <8°API
World Crude Oil Production
50
Gap between discovered convectional reserves

Production, billion of barrels


and future reserves (production 1930-2050) 40
NGLs
Polar Oil
Deep Water
30 Heavy
Conventional
Past Discoveries
20
Billion of barrels

Future Discoveries
Production
10

0
1930 1950 1970 1990 2010 2030 2050
Year Source: The Association For The Study Of Peak Oil And Gas, Newsletter No.
Source: Colin Campbell, The Heart of the Matter, 2003 October 100 – April 2009

World oil consumption and supply


Oil Shale's
Billion ~ 32.0 Billion Bls/year
Bls/year Heavy oil
(<25 ºAPI)

20.0
Billion
Bls/yr
Histor
y
197 2006-2008
8
Conventional Oil
Heavy Oil <25 °API
Source: Campbell and Laherrère, March 1998, Scientific American, p.
78 ff and M. Dusseault, 2006
Venezuela Macroeconomics Figures : Goals

2009 2014
Poverty 65% 30%
Crude Oil Production 3,3 MM BD 5,8 MM BD

Gas Production 6,9 MM TCF 11,5 MM TCF


Refining Output 3,3 MMBD 4,1 MMBD

EPS 579 6183


Gasification 0,4 MM Families 3,3 MM Families
Labour Force PDVSA 43 thousand employees 93 Thousand
Social Investments 769 MM US$ 8.000 MM US$
Oil & Gas Industry in Venezuela - Scope
Economic and
Energy Integration Social 7 Areas of Main
Latin America Developments and
Developments Projects

International Markets
Plan Siembra Social Districts
Petrolera
Venezuela Crude Oil Reserves

17.7

20.6
1.8 112.46

133,40

133,4
133,4

17,4 19.9 1,8

11.3
11.3
6,1 10
10
6,1 9,7
9,7
1,7
1,7
0,1
0,1

Orinoco Oil Belt Eastern Division Western Division Central -South Division
Total Area: 55,314 Km2
Development Area: 11,593 Km2
C/L/M Crude Oil Reserves : 23 Billion Barrels
Orinoco Socialist Project
H/XH Crude Oil Reserves : 149.3 Billion Barrels Area: 87,068 Km2

Total
Boyacá Junín Ayacucho Carabobo
Proven Oil Reserves: (Billion of barrels)
172.3 Billion Barrels
of Barrels Estimated (Original Oil In
Situ) (Billion of barrels) 489 557 87 227 1,360

Source: PDVSA Proven Gas Reserve 7-11 TCF


Offshore Gas Developments
• Proven Reserves: 150 TCF
• Expected: 196 TCF (50% Offshore)
• Gas Production: 6,300 MMCF/D
• Prognosis by 2012: 11,500 MMCF/D

West Complex
Eastern Complex
Areas of Developments and Major Projects

N
Offshore Gas
ISLA DE
AVES Developments
Commercialisation of
Products and International
Los Monjes
Integration GOLFO DE VENEZUELA FACHADA CARIBE
FALCÓN NE

Occidente FACHADA ATLÁNTICA


Oriente PLATAFORMA DELTANA

Traditional Oil & Gas


Areas Centro Sur Certification of
Reserves

Orinoco Heavy and


Refining Circuit Extra Heavy Oil Belt
The Faja
Infrastructure
Business Opportunities
E&P Crude Oil Major Projects
• Orinoco Oil Belt Heavy and Extra Crude Exploitation:
SURFACE • Public Bidding Process of 3 Blocks for Exploitation:
19 International Companies Presented Interest.
• Assigned Blocks for Exploitation to selected Companies:
CNPC (China), Russian Consortium, Malaysian Mixed
Company.
SUBSURFACE

• Traditional Areas of Exploitation:


• 3 Enhancement Projects in East Venezuela
• 5 Enhancement Projects in West and Lake Venezuela
• 2 Enhancement Projects in South Venezuela
• Mixed Companies Operating Projects
RESERVOIR
Business Opportunities
Refining Circuit: Major Projects
• Orinoco Oil Belt Heavy and Extra Crude Processing and

SURFACE Treatment: Upgraders - 2015


• Actual Refineries in Venezuela:
• Puerto La Cruz Refinery Deep Conversion Project:
Green Gasoline. (400 KBD) – Ongoing Project
• CRP Complex: FCC Project and Deep Conversion
SUBSURFACE
Project. (900 KBD) – Ongoing Project
• El Palito Refinery: Technology Updating Unit
Projects. Ongoing Project
• New Refineries in Venezuela:
• Cabruta Refinery - 2017
RESERVOIR
• Batalla Santa Ines Refinery – 2014
• International Refineries: 5 New Refineries in Joint
Venture with 5 Different Countries: Cuba, Jamaica,
China, Brazil, Uruguay.
Business Opportunities
Gas Major Projects (on Going)
• Offshore East Projects:

SURFACE • Deltana Platform (Trinidad Border): 4 Blocks


assigned to: Chevron, Statoil, Total, PDVSA
• Mariscal Sucre: 4 Platform Units

• Offshore West Projects:


SUBSURFACE
• Rafael Urdaneta Project: 3 Blocks assigned to
International Companies (Russian Consortium,
Japanese, Repsol).

• Onshore:
RESERVOIR
• CIGMA Complex: Treatment and Processing (LNG
Train) Units
• Gas Pipelines to Domestic Market
Business Opportunities
Infrastructure Projects (on Going)
• Gas Projects:

SURFACE • West Cryogenic Complex - CCO


• Gas Anaco Production Project
• Jose 250 Gas Treatment Project
• 4 Gas Transport Lines
• Compression Plants
SUBSURFACE
• GNV Distribution Stations
• International Gas Interconnections :
• Colombia
• Brazil
• Ports, Storage and Offloading Facilities
RESERVOIR
• Social Developments:
• Motorways, Train System, Electricity and Water,
Education, Health, Communities.
PDVSA's Use Of Crude Oil Strategy
Crude oil between 8,6 and 8,9 °API

Crude oil between 8,6 and 9,3 °API Crude High quality
synthetic crude
26 °API (higher)
Upgrading
HC/XH Petrocedeño
Petropiar
<25°API
Maximum upgrading
in Venezuela. Internation
Upgraded crude al Market
16-22 °API

Crude oil between 8,5 and 39 °API


Crude oil between 8,5 and 39 °API

Crude between 16 and 39 °API


Medium
Upgrading
25°- 35°API
Petroanzoategui
Petromonagas
Upgraded crude
Partial upgrading 16 °API
Products

Light
>35°API
Specified mix National
for refinery's Refining System
diet

Products

Mix
National
Market

Crude oil between 8,5 and 39 °API


PDVSA's Use Of Gas Strategy
Challenges

 PDVSA financial issues to develop these major projects. PDVSA Is trying to attract
foreign investments from allied countries (China, Russia, Brazil, India, France).

 Recently expropiation process of local and international service companies due to


contractual and operative disagreements.

 Payments issues due to the fall of Oil Prices in 2008-2009. Late 2009 and 2010, prices
are recovering, but payments are still an issue for some major companies and contracts
(beaurecracy within PDVSA). PDVSA has debts of 21.4 US$ Billions just to financial
institutions.

 Foreign Exchange Rate Control is in place, so most of the commercial agreements


should be done in foreign currency and offshore.

 PDVSA lack of expertise (Qualified Personnel) for the gas developments and extra
heavy crude oil exploitation projects in the Orinoco Belt.

 Technologically and environmental issues will pose a big challenge for the Orinoco Belt
development and major projects.
Conclusions
 Venezuela has the second largest reserves of crude oil in the world with 172 Billions of Proven
Barrels. Venezuela is placed six in natural gas reserves in the world with 150 TCF (50%
Offshore).

 Actual bidding process in progress for 3 blocks in the Orinoco Oil Belt and agreements with
selected companies and countries. Results due to be announced by the 28th of January 2010.

 Venezuela through PDVSA has a development plan to be accomplished by 2030, and PDVSA
is taking part in every oil & gas operation project, creating opportunities for qualified and
technological experienced companies.

 British companies are well thought of by some of PDVSA’s top management.

 THE UK government through UKTI is promoting the trade of goods and services with
Venezuela including PDVSA’s major current and future projects. Examples of UKTI’s
promotional events include:
 Venezuela UK Roundtable Event in Oct 2009: 15 British Companies interacted with
senior PDVSA officials and learnt about forthcoming opportunities
 Venezuela UK technology Workshop in June 2010: One objective is to work with PDVSA
to Increase the Recovery Factor of Heavy and Extra Heavy Crude Oil Exploitation.
Thank you very much !!

García, Dic/2.009