Sowing the Oil a Strategic Vision of the Hydrocarbons Industry, the Country, and the Latin American Region

Bolivarian Republic of Venezuela Caracas, September-October 2005 • # 3

A Newsletter about Venezuela’s National Oil Industry

Exploration 4 & Production 9 Ramírez: PDVSA Production capacity to is an instrument at the increase to 5.4 million service of the country barrels per day by 2012

Refining

The Plan for 10 Orinoco Oil Belt 13 Refining investment for To produce 1.2 million $16.5 billion planned barrels per day of Sowing heavy crude by 2012

the Commercialization il & Supply PDVSA’s O 14 16 Strategic Plans by sector PDVSA increases export Venezuela celebrates page project a long-term vision of the market diversification OPEC’s 45th anniversary 2 Venezuelan Oil and Gas Industry by 2030 Excerpts from President Hugo Chávez’s address

The Plan for Sowing the Oil a strategic vision of the hydrocarbons industry, the country, and the Latin American region

The President of the In Perspective Certification of Reserves Bolivarian Republic This strategic plan covers the next The first project will certify Venezuela’s of Venezuela, Hugo 25 years, from 2005 to 2030, so as to oil reserves before the world. This is an Chávez, presented the coincide with the Bolivarian Bicenten- exploration program for the next sev- nial 1830-2030, and upon its comple- eral years, with greater scope, scientific projects and vision of tion we will be able to tell the world research, for prospects. The Orinoco the National Oil and Gas “We have not plowed in the sea, the Oil Belt covers an area of 55,314 Industry for the next Nation has been saved, rebuilt, and is square kilometers. There are 11,593 going forward in an irreversible process square kilometers under exploitation 25 years forever.” In honor of the spirit of that at the moment. The area which will be statement, in honor of the famous Ven- quantified covers 18,000 square kilo- ezuelan writer, Arturo Uslar Pietri, of Dr. meters. Other remaining and reserved Juan Pablo Pérez Alfonzo (Venezuelan areas cover 25,000 square kilometers. founder of OPEC) and of all those who ecently PDVSA’s Strategic warned, wrote, said, fought and even Venezuela has reserves of some RPlans by sector were presented died for the national sovereignty of our 312,000 million barrels of oil and the in Caracas, projecting a long-term hydrocarbons, I propose that we name coup d’etat (refers to the cup against vision of the hydrocarbons industry the 2005-2030 Plan: “Sowing the Oil”. Chávez gov’t in 2002) was nothing for Venezuela and the Latin American more than the consequence of our region. PDVSA’s Strategic Plans by sector goverment plan to recover control of are: quantification and certification the oil industry for the State and place Bellow we present excerpts of the of our reserves, the Orinoco Project, it at the service of national interests. openning speech of the Venezuelan the Caribbean Delta Project, Refining, President, Hugo Chávez: Infrastructure and Regional Integration. Orinoco Project

Today we announce to the Nation and All Venezuelans know that Petróleos de The Orinoco Project covers the Orinoco to the world our strategic plans as Venezuela was in the hands of a cor- axis and includes part of the Apure initiated and generated by the New rupt, anti-national, treasonous elite and River, a great development area. The PDVSA. It is a national project, which powerful international interests. They plan is to explore and develop the we have been carrying forward for had managed to control the oil industry various fields of the Oil belt: Boyacá, several years, to which the government, from its brain to its hands, its policies, Junín, Ayacucho and Carabobo, the nation as a whole, is committed in strategies, and businesses. And they formerly known as Machete, Zuata, body, soul and spirit ... had placed this enormous potential Hamaca and Cerro Negro respectively. at the service of foreign interests. The New PDVSA Contact • September-October 2005 Oil Vision

The Plan for “Sowing the Oil” means We have to balance the country’s extensions of good land where there the utilization of oil, the whole oil infrastructure to foster Venezuela’s is not one refinery, not one pipeline, industry, as a lever for the integrated not one gasline, not one oil industry integral development. The plan is development of this axis and this whole installation. We have to balance infra- nation. We are using oil in that direction, to install a development pole in the structure so as to promote integrated to promote integrated social, economic heart of the country and some of development in the country. This Plan and productive development. We could these projects are already in motion includes the construction of a group take a block from the Orinoco Oil Belt of refineries in Venezuela; one of them to form an alliance with South America’s will be in the Barinas plains, with a oil companies, for example, with capacity of 50,000 barrels a day. Then Ecopetrol, or Petroecuador, Petroperu, Deltana Shelf, where we have already another refinery is planned in Caripito, Enarsa of Argentina, because we want started to drill; the Rafael Urdaneta Monagas State, also with a capacity to place this great energy resource Project in the Gulf of Venezuela and of 50,000 barrels a day, producing at the service of all the people on the surrounding areas of the Paraguaná asphalt. And the star refinery, the planet, for their future development... Peninsula. We could call this the Del- newest, in Cabruta, Guárico State. A taCaribe Project for the Orinoco at the great refinery for 400,000 barrels a day The old oil elite was really only an in- Delta and the Caribbean. Such project of oil, in the heart of the Orinoco area, strument of North American hegemonic is also an act of sovereignty over a geo- there in Cabruta, at the heart of Ven- interests and the transnational compa- political space. We are taking a step ezuela. The plan we have is to install nies. This must be said. “In speaking forward towards the Caribbean and a development axis in the geographi- the truth, I neither offend nor fear”. a step sideways, to the right, towards cal heart of the country and, some of our Atlantic border, which had been these projects are already in motion. DeltaCaribe Project totally abandoned; the domestic gas business, we must guarantee all these As outlined before other key project is Gas will be used as an element for energy supplies to our own people. We the one related to refineries. Today we endogenous development, for the all have a right to use these resources are refining 1.3 million barrels a day, industrialization of the country. One to improve our quality of life. We plan to that is to say that we are exporting ap- of the main objectives of this project build a pipeline which goes from Sucre, proximately 2 million barrels of crude includes the great petrochemical plan. crosses the center of the country, a day. With this plan we are going to crosses the plains, to take gas to the increase refining to 2 million barrels We hold the 8th largest gas reserves in West and thus balance the potential: within Venezuela. Part of this develop- the world. We have begun to develop the same for the North and South. ment project is to increase refining this potential gas business to benefit capacity in our own territory and also our own nation and regional integration; Infrastructure and in the surrounding Latin American energy cooperation with the countries Refining Projects region, as I already mentioned, one of of Latin America and the Caribbean. the most important refining projects will The Gas Project is divided into various The development of infrastructure; that be the refinery in Pernambuco (Brazil). specific areas: the construction of the is to say, within Venezuela: refineries, Gran Mariscal de Ayacucho Gas In- terminals, oil installations, pipelines, Regional Integration dustrialization Center (CIGMA) in Paria 99% of which are located in the north Peninsula, in the State of Sucre; the of the country, and we have great At the last meeting of the Andean Com- munity in Lima, we proposed the creation of Petroandina and this has been well received by all. We have proposed to South America and we are going forward with the creation of Petrosur, with Argentina, Brazil, Uruguay and we hope other countries will also join Petro- sur. We have created Petrocaribe, with our brothers of the Caribbean islands. We are talking to some governments, with some of the Central American leadership, to see how we can help Central America too, to strengthen political integration, economic integra-

President of the Bolivarian Republic of Venezuela, Hugo Chávez Frías and, Rafael Ramírez, Minister of tion, social integration; the dream of Energy and Petroleum and President of PDVSA, oppening the exhibition on PDVSA’s Strategic Plans. Bolívar to achieve a multipolar world. The New PDVSA Contact • September-October 2005 Guidelines

The Plan for Sowing the Oil 2005-2030 in context is a tool at the service of our country, fighting along with the State in the recovery of our sovereignty, fighting alongside the people in the battle against PDVSA is at the service of the exploitation, supporting our national private capital so that it recovers and Bolivarian Republic of Venezuela becomes stronger, establishing new relationships with our national companies. We have here an extraordinary opportunity. We are talking about a set of investments of 56 billion dollars, with a Venezuelan State policy that emphasizes national participation, not only as operators or investors, but also in the supply of goods and services.

PDVSA recovered for Venezuelans

The new PDVSA has recovered all of its capacities after the defeat of the oil sabotage at the end of 2002 and beginning of 2003. I will always remember this situation distinctly because it is a landmark for the PDVSA that crumbled The Minister of Energy and Petroleum and President into pieces, which was no longer viable of PDVSA, Rafael Ramírez, pointed out We are in a country with a new constitutional talking about a set of investments for 56“ billion framework and with our people. Thanks to the efforts of our people, of our Boli- dollars, with a Venezuelan State policy of national varian government, of the workers and participation, not only as operators or investors, but managers of the New PDVSA, today we have the company consolidated, also in the supply of goods and services ” firm in all its operating capacities, in its oil production, its gas production, its refining capacity. PDVSA is an instru- n the following we present excerpts ning all our national capacities and ment, which is now at the service of Iof the conference on the Plan for is going to take part directly in the the whole country, not at the service Sowing the Oil which encompases construction of an economic order of an elite group, an enclave, not at the PDVSA’s Strategic Plans by that is more just and balanced. the service of transnational interests. sector, given by the Minister of It is at the service of the Venezuelan Energy and Petroleum and President A real sowing of the oil people, of our highest interests, which of PDVSA, Rafael Ramírez. cover all sectors of the country. We are working so that a real sowing A strategic vision of oil of the oil can take place; this means The international scenario taking apart the oil enclaves, democra- This is the first time that we present tizing our activity. We face the very im- Tensions are increasing in the interna- the country with a set of plans with a portant challenge of this extraordinary tional oil market as a result of structural different vision, so important that they expansion. Moreover, we want to work change factors, as we have argued transcend PDVSA itself and beco- in harmony with our national develop- within the Organization of Petroleum me a national plan which will have a ment plans, and this means having a Exporting Countries (OPEC), which decisive impact on the development definitive impact on important areas marks a market situation distinguished of our country, of our capacities, and of the country that remained submer- by instability and high oil prices. which will help to deconcentrate our ged in backwardness and exclusion. population and strengthen our indus- An aggressive foreign policy against trial sector. The Plan for Sowing the All Venezuelans should participate in the oil producing countries conducted Oil is going to contribute to strengthe- this vision. In this first instance, PDVSA by the United States, the coup d’etat

The New PDVSA Contact • September-October 2005 in Venezuela, the oil sabotage, all of Contribution Financial results 2004* this in 2002. The Iraq invasion in 2003, to the Nation (US$ m) Revenues $ 64,5 billion which caused oil production to fall from January - June 2005 3 million barrels per day to 1.8 million Net income $ 4,7 billion Income 17,312 barrels per day and which, with all the Assets $ 62,3 billion instability of the case, they are trying Income Tax 3,793 Debt to net worth 9% to produce. The tensions over Iran, the 4,776 Royalty *Preliminary results terrorist attacks in Egypt and Saudi Sub total 8,569 Arabia. This is to say that instability persists in the Middle East and in the Social programs 744 aspects and we have an extraordinary petroleum producing countries. In Fondespa 1,000 capacity to undertake associations, addition, of a sustained and permanent and joint-ventures, within the framework Total $ 10,313 demand, caused by a structural of our new law, with all the partners change in the world economy. needed to move this project forward. Additionally, the great economies of PDVSA financial management China and India are boosting their with social investment Our fiscal contribution and our task in manufacture and industrialization the social sphere are clearly reflec- with high energy consumption. We can count on a company streng- ted in the financial results for the first thened not only in all its operational quarter of 2005. We are reinvesting in The absence of spare production ca- aspects, but also in its extraordinary Venezuela the surpluses generated pacity and a sustained process of low financial results. A company that by oil through the Fund for Econo- prices during the 80‘s and 90’s brought last year had worldwide revenues mic and Social Development of the about disinvestment and, as a result of 64 billion dollars, with a net pro- Country (Fondespa). Since the Fund additional production capacity was not fit of 4.7 billion dollars, with some was created, we have deposited $3 built. Within OPEC we have discussed excellent financial results that have billion, and this has served to complete that when production capacities reach won us a positive standing by credit a number of infrastructure and service their top, there is a risk of a dangerous rating agencies, which have always projects, among which there is a $600 deficit in production capacity, which been very tough on Venezuela. million contribution for electric power cannot be solved in the short term. generation. Approximately 25% of the This warns us that, in the short and We have brought health back to the total amount is dedicated to roads and medium term, we are going to have a company in all its fundamental financial (continued on page 6) problem that is clearly detected by the market; in addition to a decline in the production of non-OPEC countries. We Income increase due to royalty adjusment also have to add the refining capaci- in Orinoco Oil Belt associations ty problem. We estimate that only in Measures taken by the Energy and Petroleum Ministry the Atlantic Basin there is a deficit of

4 million barrels in refining capacity. NDMEASURE Evidence of this bottleneck is that not a STMEASURE 3URPLUSVOLUME single new refinery has been built in the 2OYALTYFROMTO BEGINING /CTUBRE ST*UNE United States during the past 25 years. Heavier crude /IL3OVEREIGNTY 0OLICY This is why we say that the era of 2OYALTYADJUSTED cheap oil is over. The market has ever TO larger volumes of heavy sour crude, MILLIONS characteristics of the crude which make it more expensive to refine, and which will continue to maintain high 2OYALTY levels. We estimate that the price )NMILLIONSOFDOLLARS situation we are seeing has come to /IL/PPENING stay, and when the conditions are 0OLICY appropriate, we will have to promote a new band system that will enable the stabilization of the oil market. !NNUALINCOMEFROMROYALTY The New PDVSA Contact • September-October 2005 Production & Exploration

(continue from page 5) Growing through own effort

highways, transport systems, water systems, housing and education. This is a fundamental role assigned PDVSA plans to increase to us by Article 5 of the hydrocarbons law in force, and with which crude production to 5.4 million we are gladly complying, with the direct involvement of our managers. bpd by 2012 Shaping and development of the national industry

We are in the process of creating a 100 million dollar fund for the industrial sector to promote new types of organizations. We have more than 5,000 suppliers of goods and services in our records, and the majority of them are at a standstill. We are going to study this and we are going to offer all the technical support, all the financial support needed, but complying with our commitments in the social area so as to incorporate the people into all these activities in order to strenghten the national economic and achieve diversification.

All the developments that we will “undertake, both upstream and downstream, as well as offshore, will be closely tied to integral development of the region, which is why all of Full petroleum sovereignty Luis Vierma, these projects will have an important social Vicepresident of PDVSA This process of recovering control of component , stated Vierma our main activity and the expansion ” of our oil industry touches the development and deepening of a policy we DVSA’s Exploration and objectives to be reached through have come to call Full Petroleum So- P Production Vice-Presidency own effort and third-party support. vereignty. We are committed to dis- pointed out the goal to increase mantling the Oil Opening, which ac- crude production to 5.4 million barrels The national production increase tually compromised the control of the per day by the end of 2012. Of this is in tune with estimates accor- Venezuelan State over its resources. figure, 4 million will be contributed ding to which, at the present rate, We should remember that our Cons- by the industry through own efforts. world oil production by 2012 will titution, the previous one and the reach 90 million barrels per day. current Bolivarian one, reserve the The corporate strategy covers the hydrocarbons control and administra- increase of light and medium gravity To materialize the plans set forth for tion to the State, as well as the effec- crude reserves, as well as increasing Exploration and Production (E&P) in the tive control of its national operator. the value of its heavy crudes, as Business Plan will require a disbur-

The New PDVSA Contact • September-October 2005 Production & Exploration

Investment Plan ($ in millions) --

)NVESTMENTS %XPENSES

Current Infrastucture • 16,700 wells • 83 drilling rigs • 14,481 kilometers of pipelines • 16 tank farms • 4 marine shipping terminals • 203,000 square kilometer area %XPENSES )NVESTMENTS /WNEFFORTPRODUCTION

sement of $41 billion, of which $21.7 as well as offshore, will be closely of Urdaneta, Ceuta-Tomoporo, billion will be directed to investment tied to integral development, which and Barúa-Motatán Projects. and $19.5 billion to expenses. is why all of these projects will have an important social component”. In the east, there is a water and gas It is estimated that 75% of Venezuela’s injection project at El Furrial, the geological basins have yet to be Main Exploration and development of Tácata, Mix Saddy fully analyzed, which is why the E&P Production projects and Bare-Arecuna, Pesao West projects portfolio includes the eva- and Morichal Projects mainly. luation of all of the country’s existing Each of E&P’s divisions is to carry out areas. At least 651 projects will be a number of projects, which in the The search for light, medium and studied with the aim of adding ano- national scene, will enable PDVSA heavy gravity crudes will require ther 44 billion barrels to reserves. to achieve its foreseen targets. alternate fluid injection for enhanced recovery, real-time monitoring of At the PDVSA Strategic Plans event, In the west, for example, plans relate reservoirs, recovery factor increase Luis Vierma, Exploration and Produc- to the construction of a power ge- either through intelligent well drilling tion Vice-President stated, “All the neration plant, the development of or enhanced recovery and the use of developments which we will under- the Cretaceous formation in Lake steam or chemicals, which also poses take both upstream and downstream, Maracaibo, and the development an important technological challenge for the Venezuelan oil industry.

Addition to crude reserves by 2012 Due to Exploration and Production objectives, plans are being made West 36 wells adding 3,340 million barrels to reserves to increase crude storage capacity East 102 wells adding 4,110 million barrels to reserves in the west to 2.7 million additional barrels. Towards this end, 14 addi- South-Center 58 wells adding1,150 million barrels to reserves tional tanks will be built in the area. Total 196 wells adding 8,600 million barrels to reserves In eastern Venezuela storage capa- Areas under exploration 2005-2012 city will be increased to 6.6 million barrels, 21 tanks will be built, together with 3 new marine terminals and 650 kilometers of oil pipelines. !VES)SLAND

All these new developments are 'ULFOF 6ENEZUELA aimed to meet the demand of natural 4HE-ONJES #ARIBBEAN&RONT markets as those of Latin America &ALCON.% !TLANTIC and the Caribbean, operating &RONT under the Petrosur and Petrocaribe 7ESTERN agreements, and the United States %ASTERN $ELTANA as well as those of emergent markets 3HELF such as China and India.

#ENTRAL 3OUTHERN !REAIN DISPUTE The New PDVSA Contact • September-October 2005 Orinoco Oil Belt

Doubling current crude production

Orinoco Oil Belt to produce 1.2 million barrels per day of crude oil by 2012

PDVSA’s strategy in Orinoco Oil Belt resources (bn bbls) the development of the Reservas de hidrocarburos (Visión Global) Orinoco Oil Belt, besides being aligned with the Nation’s economic and Carabobo social development Boyaca Junin Ayacucho plan, will enable the 312 certification of its /THERS crude reserves, thereby !SIA %UROPE 2USSIA !FRICA !MERICA consolidating Venezuela 6ENEZUELA -IDDLE EXCLUDING as the country with %AST 6ENEZUELA the world’s largest

hydrocarbon reserves “The strategic orientation of the Orinoco PDVSA and president of the Corpora- Belt’s projects aims at converting this ción Venezolana del Petróleo (CVP) at huge hydrocarbons resource into a PDVSA’s Strategic Plans meeting. Del sustainable axis to power the country’s Pino considers that an Orinoco Belt ob- t has been estimated that, with economic, social, industrial and tech- jective is that it should supply important Ithe startup of the PDVSA 2006- nological development, through raising crude volumes to the world’s markets, 2012 Business Plan, the Orinoco Oil the value and achieving an optimum in a secure and reliable manner. Belt would be producing 1.2 million development of its resources, within barrels per day by 2012, which would the National Development Plan and the The development of the Orinoco Oil mean doubling the current produc- legal framework in force”. The above Belt will require an investment of $15.4 tion of 600,000 barrels per day. statement is derived from a presentation billion, which is approximately 30% made by Eulogio Del Pino, a director of of the total amount budgeted in the PDVSA 2006-2012 Business Plan.

Orinoco Oil Belt Magna Reserva Project

The old PDVSA The new PDVSA The principal aim of the Magna Low productivity Greater productivity and Reserva project is to achieve the and reserves recovery reserves recovery quantification and certification of Only 13% of reserves officially proven Total reserves certification reserves in the Orinoco Oil Belt -es- Third-party projects Third party projects in accor- timated at 235 billion barrels- as with unfavorable for Nation dance with laws in force their inclusion, Venezuela would have the largest accumulation of liquid No commitment to the country’s Committed to the Nation’s Econo- Development Plan mic and Social Development Plan hydrocarbons in the world, with an approximate total of 312 billion barrels Minority State participation Majority State participation in reserves, which is an amount larger Traditional markets (countries and Multi polar markets (customer than that held by Saudi Arabia. customers) and market diversification) The New PDVSA Contact • September-October 2005 The quantification and certification of reserves would enable:

The positioning of Venezuela as the country with the largest crude reserves in the world The application and development of new technologies The provision of a technical basis for carrying out new business analyses The leveraging of the development of the country’s Northeastern and Orincoco-Apure axis.

Towards this end, the Belt has been of quantification and certification. med studies are undertaken, using divided into four main areas: Boyacá, The current effective recovery factor new technology and synergies with Junín, Ayacucho and Carabobo, which for the Orinoco Belt should be from Venezuelan and international com- in turn have been sectioned off into 27 12% to 16% of the oil in place. If this panies, it should be possible to meet blocks of 500 square kilometers each, factor could be raised to a level of national market demand and to export in the interest of expediting the tasks around 20%, and once the program- crude even beyond the year 2100.

More than $16 billion will be invested in gas during 2006-2012 PDVSA presented the strategic plans that will DeltaCaribe Project enable it to develop the country’s huge natural will power gas industrialization gas potential on land in Venezuela and offshore, with the aim of meeting national market demand, leveraging the petrochemical industry, building a new productive model and promoting Latin American and Caribbean integration

ith the development of the gas Eulogio Del Pino, business on land and offshore, Director of PDVSA and W President of the Corporación Venezuela will give a definitive boost to Venezolana del Petróleo (CVP) its petrochemical industry, contribute to the construction of a new socially PDVSA plans to productive model, and promote Latin American and Caribbean integration. develop high impact This ambitious project bears the name gas projects and of “DeltaCaribe Project” and is one of increase production the fundamental elements of the Plan from 6.3 to 11.5 for “Sowing the Oil”, which President Hugo Chávez’s Bolivarian govern- billion cubic feet ment will carry out through PDVSA. per day by 2012 (continued on page 10) The New PDVSA Contact • September-October 2005 DeltaCaribe

(continue from page 9)

billion per day. At Yucal-Placer, in the center of the country, production is to increase from 100 to 300 million cubic feet per day (m cu ft/d), while 100 m cu ft/d will be added at Barrancas, in the country’s central-western region.

Regarding infrastructure, the major projects are the Central-Western Interconnection (ICO), which will ensure a national energy balance; the Barbacoa-Margarita gas transmission line, which will provide the fuel for the island, the country’s leading tourism center; the expansion of the network connection systems of Anaco-Puerto La Cruz (Jose), Anaco-Puerto Ordaz, the North-Llanero transport system, and the Offshore-Land gas pipeline in the east Venezuela has 2.5% of the world’s total gas reserves, 29.3% of of the country. All of these pipelines the continent’s reserves, and will be built with PDVSA’s own efforts. 59% of the proven reserves in Central and South America Offshore opportunities

The Venezuelan government has promoted private sector participa- Venezuela has a total estimated gas potential of 196 TCF, tion in the gas business through the about 50 % offshore, what would place it as the fith largest new Gaseous Hydrocarbons Law, country in gas reserves in the world part of a modern legal framework that provides security and stability for investors. The Law also permits a Gas is one of most attractive forms of of the Corporación Venezolana del national and foreign investor partici- energy in today’s world because of its Petróleo (CVP). Del Pino reported that pation of up to 100% of the capital. efficiency, low cost, and cleanliness. the Corporation plans on investing a to- It is estimated that that its demand tal of $16.8 billion in major gas develop- A clear example of the opportunities will increase between 2.4% to 2.8% ment projects, and to increase produc- that are available are to be found in per year until 2030. Faced with this tion from 6.3 to 11.5 billion per day by the offshore projects Deltana Shelf (31 scenario, Venezuelan authorities have 2012. The amount represents 30% of tcf) and Rafael Urdaneta (35 tcf), taken on the challenge of developing total investment planned for the period. in the east and west of the country, the potential lying in our own country, respectively, which are going forward to meet rising demand, and eventu- Land operations with third-party participation. Also ally exporting production surpluses. available to outside participation Natural gas development presents a are projects such as Mariscal Sucre In the world scene, Venezuela ranks unique opportunity to energize regional (14.3 tcf), Corocoro (3 tcf), and eighth among the countries with the economies, to fulfill basic needs, and the construction of the Gran Mariscal largest natural gas reserves; which to contribute to achieving the po- de Ayacucho Industrial Complex is to say, with 150 trillion cubic feet tential inherent in human, economic, (CIGMA) in the country’s northeast. (TCF), after Russia, Qatar, Iran, Saudi and technological capacities. Arabia, the United Arab Emirates, At the Deltana Shelf, Block #2, which is the United States and Algeria. Among the leading projects for gas operated by Chevron and ConocoPhil- development on land are: increasing lips, one is expecting a declaration An estimate of the magnitude of the production at Anaco, a gas produc- of its commercial viability in the first task ahead was given by Eulogio Del tion and distribution center located quarter of 2006. At Block #4, operator Pino, PDVSA director and president in eastern Venezuela, from 1.7 to 2.8 Statoil expects to continue its explora-

10 The New PDVSA Contact • September-October 2005 Main Gas Projects Land/ Prod. Offshore/ Prod. Infrastructure Barrancas Mariscal Sucre Interconexion (100 m cu ft/d) (1,200 m cu ft/d) Oriente-Occidente (ICO) Yucal Placer Deltana Shelf Gasline (300 m cu ft/d) (1,000 m cu ft/d) Barbacoa-Margarita Anaco Rafael Urdaneta Improved conexion (2,794 m cu ft/d) (to be defined) Anaco-Puerto La Cruz and Anaco-Puerto Ordaz Corocoro Transport system (to be defined) Norte-Llanero Gasline Offshore–Land m cu ft/d: million cubic feet per day

tion campaign in the second quarter The first stage of the Mariscal Sucre that the Exploration and Production of 2007. Block #1 is to be developed Project, which includes the Río Caribe development schedules in the west by PDVSA, with its own effort. and Mejillones fields, will be under- of the country will in practice be taken by PDVSA with its own effort. aligned with CIGMA scheduling. The oil industry also expects that Drilling in these reservoirs is expected the process leading to the unifica- to begin in the second quarter of 2007. With regard to the Liquefied Natural tion of reservoirs I and II with Trinidad Gas plant (LNG), the CVP presi- & Tobago will be completed by the CIGMA Project dent stated that it would be avail- first quarter of 2008, to thereby bring able to all producers. The plant, on line the first production from the The Gran Mariscal de Ayacucho which is due to be completed by second Block by the end of 2009. Industrial Complex (CIGMA) that will the end of 2010, will be located at consist of a pier to land machinery CIGMA and operated by PDVSA. and construction equipment would be completed by the end of 2006, Other Latin American integration and that the services pier would be in initiatives, such as a pipeline which The potential of the DeltaCaribe operation by 2007. Also a terminal for would cross Colombia at the Guajira Project with its offshore the storage and shipping of crudes and Peninsula, and a system that would products would be ready by 2008. connect the Caribbean and reach as developments in the east and far as southern Brazil, would eventu- west of Venezuela is comparable Engineering activity on this proj- ally become part of this effort. to few projects in the world ect is underway, and it is expected

The New PDVSA Contact • September-October 2005 11 Refining

Etanol Project moves forward

Investment for $16.5 billion to strenghten refining capacity

Plans to cover the expansion, upgrading efining investment within the and construction of new refineries, both in RPDVSA 2006-2012 Business Plan is to reach $16.5 billion, and includes Venezuela and abroad, are aimed at processing Alejandro Granado, the construction of a system of three Vicepresident heavy crude from the Orinoco Oil Belt new refineries in Venezuela, as well of PDVSA as upgrading and refurbishing plans in existing facilities to process heavy crudes in existing refining complexes. The Ethanol Project’s first crop and veloped by Intevep, PDVSA’s research According to estimates, $10 billion initial industrial operation are planned and development subsidiary. Invest- of the above mentioned amount are for the third quarter of 2006, and the 21 ment has been estimated at $6 billion, to be devoted to strategic projects thousand barrels per day production and its operational startup has been within the country, with $2.6 million average is expected to be achieved planned for the second quarter of 2011. going to other major projects. The by 2012. This will require an indus- Ethanol Project will require $1.3 billion, trial investment of $930 million and The third refinery will be located at while $2.2 billion will go to meet an agricultural investment of $417 Caripito and will have a 50,000 barrel the targets set for Petroamérica million, for a total of $1.3 billion. per day capacity to process crude from Lake Guanoco. The complex will pro- These investments will enable to New refineries duce mainly asphalt to meet national increase the processing of heavy demand and requires an investment of crudes by 62%, to 910,000 barrels per The three new Venezuelan refineries $500 million. It is expected that the Ca- day, as well as to achieve an ethanol will be built along the Orinoco-Apure ripito refinery, also in the State of Mona- production of 21,000 barrels per day, axis and meet the objective of powe- gas, will boost the economy of the area. thereby providing further leverage for ring internal development. The first one, the country’s new productive model. to be called “Batalla de Santa Inés”, will Expansion plans be located in the State of Barinas. This Ethanol Project facility will process 50,000 barrels per The Business Plan also contemplates day of Guafita crude, to meet regional adapting the Puerto La Cruz and El Because Venezuela discontinued the fuel demand. The complex will begin Palito refineries as well as the Para- use of tetra-ethyl-lead (TEL) as an oc- operation at the end of 2010, and will guaná Refining Complex for further tane-enhancing additive in the gasoline require investments for $1 billion. processing of Venezuelan heavy sold in the country, 21,000 barrels per crude, which is to become increasingly day of ethanol are required to replace Another refining complex will be loca- available with the execution of PDVSA´s it. The Ethanol Project includes the ted at Cabruta, in the eastern State of exploration and production projects. planting of 105,000 hectares of manioc Monagas, and will process 400,000 and 209,000 hectares of sugar cane. barrels per day of approximately 8.5º Puerto La Cruz refinery. Two 80,000 The strategy involved will integrate the API Orinoco Belt crude, the distillates and 90,000 barrels per day units will be country’s endogenous and territorial produced by this facility being earmar- revamped at this facility located in the development through a progressive ked for the export market. It should be eastern State of Anzoátegui. The new and sustainable production of etha- pointed out that Cabruta will use the plant will process heavy Merey crude to nol, thus generating 5,600 new jobs. HDH Plus upgrading technology de- cover internal demand and export fuels

12 The New PDVSA Contact • September-October 2005 (gasoline, jet-fuel, diesel and naphtha). Orinoco-Apure axis territorial deconcentration

The construction will require $1.7 billion 02#THBPD outlay, of which $50 million will be %XISTINGREFINERIES 02#2EF .EWREFINERIES PDVSA’s contribution to promote social %,0THBPD projects related to the oil industry. 0,#THBPD %,02EF 0,#2EF El Palito refinery. A high-conversion unit to process 70,000 barrels per day of heavy crude will be installed at this facility in the State of Carabobo, thereby eliminating the production of #!2)0)4/2EFTHBPD fuel oil at this refinery. Capital invest- 3!.4!).»32EFTHBPD #!"254!REFTHBPD ment required has been estimated at $1,200 million and will generate 300 • PRC: Paraguaná Refining Complex • ELP: El Palito direct jobs and 1,200 indirect ones. • PLC: Puerto La Cruz • th bpd: thousand barrels per day

Amuay refinery. The main refinery of the Paraguaná Refining Complex, million investment, and the operational bute $3 billion to the project, which one of the largest in the world, will startup has been planned for 2007. is 50% of the investment required. further upgrade its facilities through projects designed to achieve even Expansion of the Kingston refinery in Refurbishing La Teja refinery in Uruguay. larger fuel oil conversion volumes. Jamaica. PDVSA plans to bring about This complex is to process 50,000 a project to expand the moderate con- barrels per day of extra-heavy Orinoco The Regional Energy version Kingston refinery in Jamaica Belt crude through a high conversion Integration Initiative and increase its 36,000 barrel per day scheme. Venezuelan companies capacity to 50,000 barrels per day of would participate in the project and Venezuela, through PDVSA, is pro- 22º API Leona crude. Operational star- its operational startup is foreseen moting a number of initiatives aimed tup has been scheduled for 2008, and for 2010. Investment is estimated at strengthening regional energy a $197 million investment. 50% of this to be in the order of $600 million. integration. Some of these are: which is to be contributed by PDVSA, will be required for the initial stage. All of these projects are aimed at Reactivation of the Cienfuegos ensuring the processing of Venezuelan refinery. PDVSA and Republic of Building a refinery in Brazil. This crude, given the fact that additional Cuba authorities are working on the project is to be undertaken jointly by world demand for refined products is studies required to materialize the PDVSA and Petrobras, the Brazilian estimated at approximately 7 million reactivation of the Cienfuegos refinery, national oil company. Its feedstock will barrels per day by 2010, which is why in order to meet internal fuel-market be a 50/50 blend of Orinoco Belt and PDVSA is gearing up to meet the added demand. The task requires a $44 Brazilian crudes. PDVSA is to contri- demand from its export markets.

PDVSA Refining System (2012)

US capacity: 1,116,000 bpd Europe capacity: 252,000 bpd

Nynäs 50% Sweden / Belgium / UK

Germany

Capacity in Venezuela (m bpd) Island Capacity abroad Brazil (m bpd)

Sta. Inés

m bpd: million barrels per day Caribbean / Brazil / Uruguay capacity: 853,000 bpd

The New PDVSA Contact • September-October 2005 13 Commercialization and Supply

Firm steps in response to increased world demand he Petróleos de Venezuela 2006- T2012 Business Plan envisages, among its main objectives, the diversi- PDVSA increases export fication of its export markets. Towards this end, the Commerce, Supply and market diversification Transport Executive Management Unit designed its commercial plan covering a seven-year program, which is an integral part of the 2005-2030 macro plan known as ¨Sowing the Oil¨.

Product exports totaling 1.4 billion barrels per day (bpd) have been planned for 2012. This volume is almost double that of the 757,000 bpd which are being marketed abroad today in the form of jet fuel, asphalt, gasolines, and napthas.

International market diversification

At the moment, 57% of the crude and products exported are placed in North America. The figures of 975,000 bpd for crude and 278,000 bpd for products have remained a constant over time. Since 2002, PDVSA has increased its supply to Latin America and the Caribbean by 31%. The total volume is accounted for by 420,000 bpd of crude and 254,000 bpd of products.

With regard to Europe, supplies are 88,000 bpd of crude and 61,000 bpd of products, which is 7% of exports. Asia receives 22,000 bpd in crude and 104,000 bpd in products, amounting to 6% of Venezuelan oil exports.

Petrocaribe

Venezuela’s energy cooperation initiative foresees two scenarios. A short term one, to supply crude to the islands The strategic orientation of the PDVSA Commerce, of the eastern Caribbean -Dominica, Jamaica and Cuba- from Venezuela or Supply and Transport Management Unit is towards from Isla refinery in Curaçao. Eastern the domestic market’s energy security, followed Caribbean requirements of 11,800 bpd by the use of hydrocarbons as a factor in Latin will be transported in small tankers, while larger Panamax type tankers will be American integration (Petroamérica) and market used to transport the 93,000 bpd cove- Asdrúbal Chávez, red by the supply agreement with Cuba. Director of PDVSA diversification (Europe and Asia), while maintaining traditional markets, such as the United States The medium and long term supply strategy for the region includes the

14 The New PDVSA Contact • September-October 2005 Commercialization and Supply

activation of the Cienfuegos refinery trobras refinery to be built in Brazil, National commerce and the Matanzas terminal in Cuba, Pernambuco, called Abreu e Lima. and supply scene as well as storage centers in Domini- ca. The Bopec (Bonaire) and Borco In the Petrosur context, Venezue- (Bahamas) distribution centers will la has signed energy cooperation also be used for this purpose. agreements with Brazil, Argentina, Uruguay and Paraguay, and has also The materializing of these pro- promoted negotiations for the cons- jects will require an investment of truction of a products pipeline through approximately 24 million dollars Colombia to the Pacific Ocean. between 2006 and 2012 to cover the whole of the Caribbean in terms To supply such volumes to all of of the Petroamérica objectives. these markets, especially to Latin America, will require a fast renova- The national fuel distribution system Within the strategy of supply to tion of the current shipping tonna- in Venezuela is concentrated in the South America through the Petrosur ge, because a total of 58 tankers to north of the country, since refineries and Petroandina initiatives, a first transport 45% of the 2012 export have traditionally grown together with aspect to be taken into account is volume should be available by then. distribution centers, as explained by the supply of fuel to the PDVSA-Pe- Asdrúbal Chávez, PDVSA’s Commer- ce, Supply and Distribution Manager and Board’s Committe Director.

For this reason, future distribution centers will be built alongside the refining complexes to be constructed in the interior of the country, such as Batalla de Santa Inés, Cabruta and Guanoco refineries. At the same time, crude pipelines joining the Paraguaná Refining Center (PRC) with La Fría, and with Cisco, a system that transports fuel to Barquisimeto, in the northwestern State of Lara. From there the system will then interconnect with the product pipeline that reaches Yagua, in the central State of Carabobo. A new distribution center for the Tuy Valleys area, linked to the planned development of the national 2006-2012 Crude Supply (m bpd) railway system, has also been foreseen.

PDVSA estimates, a total investment of $760 million will be required between 2006 and 2012 to develop these plans, which include the construction and renovation of improved distribution facilities in Venezuela.

Deltaven currently has 722 service stations flagged under the PDV sign, while also serving 312 indepen- dents, for a total of 1,834 points of sale of this type. It is expected that by 2012 Deltaven will be positioned #RUDEEXPORTS directly in 895 service stations, which #RUDETOREFINERIES "RAZIL would give it 45% of the market.

The New PDVSA Contact • September-October 2005 15 Oil sovereignty

with nature, as well as musical ele- At PDVSA´s La Estancia Art Center ments that allude to the diversity and riches of the cultures of the countries that make up the Organization. Venezuela celebrates 45 Years of OPEC exhibition OPEC’s 45th anniversary At the same time, the “45 Years of OPEC” exhibition was opened in the ro- oms of La Estancia Art Center, divided into three sections. The first emphasi- zed the most important achievements in OPEC’s history; the second was dedicated to the theme of “A Shared Challenge within OPEC”, highlighting the contributions made by Venezuelans such as Juan Pablo Pérez Alfonzo, Alí Rodríguez Araque, Álvaro Silva Calde- rón and the present Minister of Energy and Petroleum and President of PDV- SA, Rafael Ramírez. The third and last section included images and artwork representing the cultural heritage of the eleven nations that make up OPEC.

The celebration of the 45th anniversary of OPEC The validity of the reaffirms Venezuela’s oil sovereignty Petroleum Pentagon

In his speech, Rafael Ramírez referred to the continued validity of the he Ministry of Energy and Petro- Multi-ethnic music Petroleum Pentagon when comparing Tleum, PDVSA, and La Estancia “with moons and stars” the oil industry at the present time Art Center, with the support of the with this theory of the OPEC founder. embassies of OPEC member coun- The event began with a musical com- As regards ‘fair participation’ as tries in Venezuela, celebrated the position entitled “The Crescent Moon advocated by Pérez Alfonzo, he 45th anniversary of the Organization and the Seven Stars”, composed by said, “we maintain this principle by of Petroleum Exporting Countries Diego Silva Silva. This piece, which maximizing the State’s participation (OPEC) with a concert performed by was written in 2000 for the celebration through royalties and the payment of the National Philarmonic Orchestra. of the II International OPEC Summit, income taxes”. As to the principle of was selected again by virtue of its ‘no more concessions’, today we say During this event, which gathered aesthetic and conceptual value, which “no more operating agreements that many representatives of the ener- emphasizes symbolic associations go against the interests of the nation”. gy, political and cultural spheres of Venezuela, the Minister of Energy and Petroleum and President of PDVSA, Rafael Ramírez, stated, “OPEC has become an extraordinary instrument to defend and maintain sovereignty over hydrocarbons”. In the same vein, he said, “Venezuela will continue to defend the just value of the oil barrel and the formulation of policies which ensure that the Venezuelan people will enjoy the benefits resulted from the sale of this non-renewable natural resource”. The Minister of Energy and Petroleum and PDVSA’s President, Rafael Ramírez, touring the exhibition accompanied by various industry leaders.

16 The New PDVSA Contact • September-October 2005 The National Philharmonic Orchestra opened the event with the moving “With moons and stars” concerto.

As to ‘coordination for the conservation dedicated to fight poverty and eliminate and marketing of hydrocarbons’ he inequality. “PDVSA is opening up to the said that today this principle means the benefit of the people and commits itself strengthening of the Ministry of Energy to their future; oil income not only con- and Petroleum in conducting petroleum tributes to the expansion of the nation’s policies adapted to the new realities of economic and industrial platforms, but the international markets. With regard also represents a vital source to provi- to the Pérez Alfonzo’s requirement de its inhabitants with jobs, education, that ‘national petroleum companies health care and a better quality of life”. be created’, the Minister added “at this time we are trying to recover OPEC: retrospective our oil industry and strenghtened it according to the highest interests The Organization of Petroleum Expor- “Venezuela will continue to defend of the Venezuelan state”. ting Countries (OPEC) was created on September 14, 1960 in Baghdad, in the just value of the barrel and the Minister Ramírez continued “in the association with Saudi Arabia, Kuwait, formulation of policies that allow light of today’s realities, we would have Iran, Iraq and Venezuela, the last a the people to enjoy the benefits to add to Pérez Alfonzo’s Pentagon country that played a definitive role in derived from this non-renewable the revision of our internationalization its foundation, thanks to the initiative policies, which are based only on put forward by the then Minister of natural resource” commercial interests, for policies of Mines and Hydrocarbons of Venezuela,

Rafael Ramírez at the inaugural act integration, diversification, and techno- Juan Pablo Pérez Alfonzo, a politician of the OPEC’s 45th anniversary logical independence that consolidate and oil strategist who foresaw the need our sovereignty over our oil”. Ramírez for an instrument to defend oil prices, also highlighted PDVSA’s active parti- to avoid economic loss related to oil cipation as a tool for social progress, as an exhaustible resource, as well as the instability of price fluctuations.

During that same decade, Qatar, Libya, Indonesia, the United Arab Emirates and Algeria joined the organization, followed in 1971 by Nigeria. Since its inception, OPEC has been an instrument to fight for justice, freedom, peace and development. From the beginning, the Bolivarian government of Venezuela has worked to strengthen OPEC. In 2000 the II OPEC Summit was held in Caracas, which renewed the commitment of the member countries with greater force, to achieve the goal of defending a fair price for oil as a non-renewable natural resource, under the principles of unity and The exhibition also includes artcraft, typical dresses and images of the nations that integrate OPEC. political will at the highest level.

The New PDVSA Contact • September-October 2005 17 Petrotips nezuela to the southern States of PDVSA in figures the US, which had been devastated The Health Ministry backs Misión Ribas by Hurricane Katrina. Venezuelan president Hugo Chávez said that The employees of the Louisiana governor Kathleen Blanco Health Ministry who had accepted the aid and thanked have been unable to Venezuela for this goodwill gesture. finish their high-school education will now Five new transition agreements have the chance to do so at their place towards joint ventures were signed of work through an agreement of that Ministry with the Misión Ribas Foun- Recently, five new dation, coordinated by the Ministry of transition agreements Energy and Petroleum. Public institutio- were signed with ns with a high percentage of emplo- Perenco, Tecpetrol yees in a similar situation can avail and Teikoku Oil de themselves of the Misión Ribas services Venezuela, in which the migration from to offer continued education to their operating agreements to joint ventures employees, following Health’s initiative. were agreed to. Petrobras also accepted the migration of their operating Public consultation on the Organic agreements to joint ventures, thereby Hydrocarbons Law’s regulations now open making 13 operators holding 22 agreements, out of a total of 32, who aligned At the inaugura- to the legal standards established in tion on the Second the Organic Law on Hydrocarbons International Gas with regard to joint ventures, in which Congress, held the State holds the majority share. recently in Cumaná, State of Sucre, Energy and Petroleum First Rafael Urdaneta Project Minister and President of Petróleos de licenses awarded Venezuela Rafael Ramírez announced the start of the consultation process Hugo Chávez Frías, prior to the approval of the regulatio- President of the Quote of the month ns pertaining to the Organic Law on Bolivarian Repu- Hydrocarbons. Ramírez said that the blic of Venezuela, handed out the The price of a barrel of Ministry was open to the opinions of the first licenses for the exploration and “crude is determined by structural various hydrocarbons-related sectors, development of Phase A of the Rafael factors, and we must give refining opinions which would serve to enrich Urdaneta Project, at a ceremony which capacity the importance it merits. the proposal, and that the Ministry’s took place in the State of Falcón, in We have said that the price would web page is available for this purpose. the west of the country. The Gazprom remain high for a considerable and Chevron representatives received time; and we have maintained Gasoline sent to the US licenses for the three blocks (Uruma- for more than a year that the states hit by Katrina co I & II and, Cardón III) which were current market situation has to put to tender last April. The licenses do with many factors, and not A cargo of more awarded will have a 30-year duration, just geopolitical ones than 12.6 million and the gas produced will go to meet ” Rafael Ramírez gallons of gasoline national domestic and industrial de- Venezuelan Minister of Energy and Petroleum and President of PDVSA at the 137th Meeting of the was sent by Ve- mand, with surpluses to be exported. OPEC Conference, held in Vienna last September, 2005

18 The New PDVSA Contact • September-October 2005 Cooperation

Venezuelan and British companies will exchange drilling technology

PDVSA promotes the consolidation of national industries at Offshore Europe 2005

Due to the efforts of PDVSA’s National Capital Formation Management Unit, a Memorandum of Understanding was signed between the Venezuelan company Geohidra and the British Seacore Limited, allowing the Venezuelan company to raise its offshore drilling Offshore Europe 2005 was atten- in the projects that Petróleos ded by more than 45,000 people, de Venezuela is promoting. capability of a depth between exhibitors, speakers, The Vice President of Geohidra over 2,000 meters visitors and hosts. PDVSA took Consultores C.A. explained that up advantage of this opportunity to until now, Venezuela has only drilled at depths of 100 and 200 meters, but present its main projects, among through the Memorandum of Unders- which are the Orinoco Oil Belt and tanding, the necessary technology DVSA’s Corporate Management Offshore Gas developments to be able to work at depths of up to Pfor National Capital Formation 2,000 meters in the Deltana Platform promoted the signing of a Memoran- will be acquired. For its part, Seacore dum of Understanding (MOU) between is a company with significant experien- the Venezuelan company Geohidra This MOU confirms the information ce in drilling deep in the North Sea. C.A. and the British company Sea- acknowledged by the international oil core Limited to exchange technolo- market about Venezuelan industries PDVSA presents the gy in the area of deep-sea drilling, that operate within the energy sector main Venezuelan oil which will aid offshore oil projects and shows the technological and pro- advantages to Europe being developed by Venezuela. fessional levels reached by the country. PDVSA’s participation in Offshore The signing of this agreement, which The signing is the result of PDVSA’s Europe 2005 gave positive results will lead to the formation of a joint approaching to different countries to to the corporation since it confirmed venture, resulted from the activities identify new business opportunities the most important advantages of carried out at PDVSA’s Business Center and allowing Venezuelan companies Venezuela in the hydrocarbons area, at the Exhibition Center in Aberdeen, to acquire the necessary competence, especially as regards development Scotland, where Offshore Europe so they will be able to participate projects that caught the attention 2005 took place last September. of investors and entrepreneurs.

The New PDVSA Contact • September-October 2005 19 Cooperation

Through CITGO The supply of fuel will be carried out directly, without intermediaries, which should result in savings to Venezuelan fuel will reach the final consumer of up to a dollar a gallon, which in this case would poor communities in the US benefit nonprofit organizations, hospitals and schools serving the poorer or less favored sectors of the population

organizations, hospitals and schools serving the less favored sectors of the population.

Payment could be effected through cre- dits and donations, President Chávez said at the gathering with New York progressive communities, which was efore the onset of winter, Vene- held at the Church of St. Paul and St. attended by representatives of more Bzuela will begin to supply fuel to Andrew in Manhattan, New York State. than 100 community, union, religious, the poorer communities of the Uni- educational and youth organizations, ted States through CITGO, a PDVSA The Venezuelan President explained as well as progressive leaders, such as subsidiary there. The announcement that the direct supply of fuel, without the Reverend Jesse Jackson, Danny was made by the President of the intermediaries in the marketing chain, Glover, social activist and President of Bolivarian Republic of Venezuela, Hugo could result in savings to the final the Trans-Africa Forum, and José Serra- Chávez Frías, during the Poverty and consumer of up to a dollar a gallon, no, a congressman of Latin American Justice in our Globalized World forum which in this case would benefit civic background.

Some 10% of the products refined by CITGO would be sold directly to organized communities of the disadvantaged

After the meeting held in Caracas communities of the poor on United by the Revered Jesse Jackson and States soil, according to Ramírez President Hugo Chávez, Energy and Petroleum Minister and President of The Venezuelan government would not Reverend Jesse Jackson during its visit to Caracas PDVSA Rafael Ramírez explained that, lose income from such a scheme, due with the Minister of Energy and Petroleum and according to the Venezuelan plan to the fact that the proposal does not President of PDVSA, Rafael Ramírez. known as “Heating Oil”, CITGO would contemplate discounts, but only the devote 10% of its refined products to be elimination of third-party intermediaries. sold directly, without intermediaries, to CITGO currently refines 664,000 barrels would pay up to 30% less for the fuels organized poor communities and non- of crude at the refineries which it opera- obtained. for-profit institutions. tes in the United States. Bernardo Álvarez, Venezuela’s The plan proposes the sale of heating According to PDVSA’s president, the ambassador to the US, has already oil and gasoline to hospitals, shelters program would be implemented before received more than 140 applications to and schools, as well as to organized the start of winter, and the beneficiaries join the plan.

The New PDVSA Contact is a Petróleos de Venezuela, S. A. publication Public Affairs Corporate Management Unit. Caracas, Venezuela. Fax: + 58 + (212) 708.44.60. For questions & suggestions: Daniel Cortez, Communications Manager • e-mail: cortezd@pdvsa.com Photography: PDVSA archive. Legal Deposit: If13820053502083. This publication may also be perused at www.pdvsa.com