Bolivarian Republic of Venezuela Contact with Caracas, January 2006 • # 4 the New PDVSA A Newsletter about Venezuela’s National Oil Industry
Cornerstone Presidents of Venezuela and Brazil, Hugo page Chávez and Luiz Inácio Lula da Silva, begin 4 construction of the “Jose Ignacio Abreu e 2 Lima” Refinery in Pernambuco, Brazil 20 Colombia, Argentina Citgo expands and Venezuela 32 transition delivery of low price point South agreements fuel to native to Mixed Americans in the US Companies 14 East and West PDVSA, world’s Venezuela, interconnected third largest oil a full member by gas 19 company 6 of Mercosur 12 Contact Contact with the New with the New PDVSA PDVSA
INTEGRAtioN » Angostura and Punto Fijo Declarations reassert energy integration Argentina, Colombia and Venezuela foster union in the South
We are sealing the great South- We are creating alternatives With a brotherhood concept, American pact that we need to for improvement that shall we shall always walk together be free; and, as Simon Bolivar said, let’s finally ensure regional integration to recover from poverty, to make it true. It is possible, build solidarity upon facts it is not a dream
Hugo Chávez Néstor Kirchner Álvaro Uribe Vélez President of the Bolivarian President of the Republic President of the Republic Republic of Venezuela of Argentina of Colombia
Visits from Néstor Kirchner and Álvaro Uribe Vélez, Presidents of Argentina and Colombia, respectively, reasserted the Petro-American initiative promoted by the Bolivarian Government of President Hugo Chávez
Once again, South America is Mercosur, strengthen the South the land, where dreams come American countries. We want to be true; the land of feasible utopias, of integrated to the rest of the world concrete utopias as, some say. And and we are interested in talking within this map and dynamics the with all countries worldwide about Caracas-Buenos Aires axis does integration, with justice, equity, no clearly emerge. From the Orinoco River subsidies, as they are really aberrant down to the Rio de La Plata, a powerful and do significant damage to the new movement has emerged fed by economies of weaker countries. That the will and the pain of our people, is why we say that we believe in interpreted by what we modestly integration, but in an integration with represent, and is taking shape, with its justice, with equal opportunities”, own claims, demands and drives. What stated President Kirchner. we are doing, I think, is answering the need of our people”, stated President Fuel for the South Hugo Chávez, during the last visit of Argentine President, Néstor Kirchner, to Presidents Chávez and Kirchner stated that the entry of Rafael Ramírez, Venezuelan Minister Venezuela to Mercosur, is a historic step. Venezuela last November 22nd, 2005. of Energy and Petroleum and PDVSA President, informed that a mixed In this meeting, taking one more step insertion and we are sure that every company will be jointly incorporated towards their peoples’ union, both day more and more countries will share by Energía Argentina (ENARSA), countries signed various agreements our vision, our orientation, and this the Argentine energy company and which enable the undertaking and strategy”, stated President Chávez. PDVSA, which will be in charge of completion of projects related to supplying up to 5 million barrels per the hydrocarbon sector, as well as “We have taken a historical step in year of industrial and automotive gas knowledge and technology exchanges. the bilateral relationship and I think oil to Argentine markets, as of 2006. that this is a historical step that will “Argentina and Venezuela have no also set a precedent for full regional The possibility for PDVSA and differences regarding international integration. We want to strengthen ENARSA to undertake joint
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exploration and production “the political will of Colombia to have was aimed at assessing current status activities in both countries was also Venezuela build the oil pipeline or poly- of relations between both countries, evaluated. Among such projects duct, between specified production acknowledging the work and progress we can highlight the quantification, sites and the Colombian Pacific area made on transborder fuel exchange of Orinoco Oil Belt reserves. in order to facilitate exports from a policies, the gas interconnection port, with the idea of reaching Asian project, and the Colombian- Julio De Vido, Argentine Minister markets. This project shall also include Venezuelan oil pipeline or poly-duct. of Federal Planning, Investment fuel upgrading plants in Colombia”. and Services, stated that joint Gas pipeline construction projects “shall be developed in the works to begin in 2006 Orinoco Oil Belt and offshore and inland in Argentina, under a sort of The Minister and PDVSA President exchange activity, for both national explained “due to the investment companies shall participate”. required, we have decided that the gas pipeline shall be built and Both governments also created an operated by Petróleos de Venezuela” organizing committee of the investments adding that, based on that decision, round to be held in Buenos Aires. engineering and work start-up activities have been scheduled for Open dialogue with Colombia the first six months of 2006.
Venezuela and Colombia are Ramírez also pointed out that project structuring their integration, stated completion has been set for within the President Chávez after signing the next 24 months. Likewise, resources Punto Fijo Declaration and the Joint to build this infrastructure where Presidents Uribe and Chávez, reaffirm the Declaration by Venezuela and Colombia Ecopetrol, the Colombian oil company, integration will of Colombia and Venezuela. in December 2005 in Paraguaná shall also be involved have been Refining Centre, State of Falcón. provisioned in PDVSA’s budget and In fact, we are currently contemplating the 2006-2030 Oil Sowing Plan. President Chávez described the to include a value added option summit with Álvaro Uribe, the through intermediate extra heavy Approximate cost of the project Colombian President, as “a meeting and heavy crude oil processing adds up to approximately 230 million to restructure integration”. at a given point along the oil dollars and the gas pipeline corridor pipeline in Colombian territory. will go from Puerto de Ballena, in “Beyond trends of thought, beyond Colombia to the West Coast of the economic fluctuations, beyond According to the document signed Maracaibo Lake, in Venezuela. circumstantial events, we keep by both Presidents, the work meeting on, making progress despite ever changing dynamics”, he said. Aruba As the Venezuelan head of State Caribbean Sea said, “the gas pipeline is an Paraguaná Guajira Península international project that will create Península jobs and works for regional (Falcón) Venezuela’s Ballena Gulf CRP development in the short term”. Riohacha Punta Cardón Likewise, with regard to energy La Guajira Mitare integration and solidarity among Urumaco people from different countries, the Colombia Venezuelan head of government Falcón Maracaibo stated “our country is willing to Cabimas extend the Petrocaribe mechanism Zulia to Colombia, as part of the Bolivarian Venezuela Alternative for America (ALBA)”.
Álvaro Uribe, the Colombian President, stated that the meeting reiterated The gas-pipeline between Venezuela and Colombia is part of the PDVSA Oil Sowing Plan.
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PETROLEUM SOWING » Presidents Lula and Chávez held the ground breaking ceremony Pernambuco Refinery makes the South-South integration come true
This project is part of a regional cooperation and integration strategy based on complementarity, as well as on fair, democratic, and sovereign use of energy resources.
Operations start-up has From left to right: Hugo Chávez and Lula da Silva, Presidents of Venezuela and Brazil respectively, during the cornerstone placement of José Ignacio Abreu e Lima Refinery, in Pernambuco. With them, been foreseen for 2011, are Jose Sergio Gabrielli, Petrobras President, Jarbas Vasconcelos, Pernambuco state governor and Rafael Ramírez, Energy and Petroleum Minister of Venezuela. with a 200 thousand barrel/day capacity Rafael Ramírez, Venezuelan Minister PDVSA and Petrobras anticipate a of Energy and Petroleum and PDVSA joint investment ranging between President; Vilma Roussef, head of the 2.5 and 3 billion dollars, and 50% Civil House, and Jose Sergio Gabrielli, shareholding for each company. Petrobras President, were also present The project’s main objective is to n a historical event focused on among other authorities from both address the increasing demand for Ienergy integration of all South countries. New facilities should be in byproducts in the Northeastern region American countries, Presidents operation by 2011 with a 200 thousand and to enable it to be self-supplied. Hugo Chávez, Bolivarian Republic of oil barrel/day (MBD) capacity, including Venezuela, and Luiz Inácio Lula da 100 thousand barrels from a project The “Abreu e Lima” refinery, under the Silva, Federative Republic of Brazil, in the Venezuelan Orinoco Oil Belt, framework of Petrosur as a mechanism held the cornerstone-laying ceremony and 100 thousand barrels from the for energy integration of the South has of the “Jose Ignacio Abreu e Lima” Campus basin production, in Brazil. been designed to process heavy crude refinery to be jointly built by Petróleos oils from both countries, —which have de Venezuela, S.A. (PDVSA) and Brazil Northeastern region huge reserves of this oil— and shall Petróleo Brasileiro S.A. (Petrobras) at will be self-supplied be focused on maximizing naphtha, the Suape Industrial Port Complex, jet, diesel and liquefied petroleum in the State of Pernambuco, Brazil. gas (LPG) production, while reducing exports from Brazil, mainly of the This project is part of a regional last two fuels mentioned above. cooperation and integration strategy based on complementarity, as 2006-2030 Petroleum Sowing well as on a fair, democratic, and sovereign use of energy resources. Building the “Abreu e Lima” refinery is part of the Strategic Refining In addition to the Heads of the Project, a fundamental axis for the The Pernambuco Refinery will generate more than Venezuelan and Brazilian Governments, 2,000 indirect jobs and 600 direct jobs in Venezuela. 2006-2030 Oil Sowing Plan devised
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last August by Hugo Chávez, the STRATEGIC LOCATION » Venezuela navigates towards the South Venezuelan President, to reduce the current worldwide deficit in such process and definitively foster South American economic and social development. Orinoco Oil Belt
Likewise, it goes hand in hand with Carabobo Aguaro-Guariquito 1 Block other plans jointly undertaken by National Park PDVSA and Petrobras in Venezuela, Mariscal Sucre such as the Venezuela-Brazil- Project
Argentina Gas Interconnection Oil-pipeline in visualization Project signed on December 9th, Improved oil cabotage route 100 MBPD Venezuela-Brazil Tanker with 100 MBPD Gas-pipeline in visualization 2005 in Uruguay, and the exploration Improved Oil Improved Marlim (from O.O.B.). Refineries and production of natural gas Orinoco River reserves in the Paria Peninsula Upgrader
under the Mariscal Sucre project. 2.000 tcf Abreu e Lima Refinery
Project integrated to the Belt Brazil
Zone Campus The new refinery will be processing 19° API Marlim 200 thousand barrels per day of a blend of 16º API Brazilian Marlim crude oil and an upgraded crude oil of equivalent quality MBPD: thousand barrels per day tcf: trillions cubic feet (upgraded Marlim) from a joint PDVSA/Petrobras production Venezuela-Brazil Business schemes project in Carabobo 1 Block, for the Orinoco Oil Belt Orinoco Oil Belt. The latter shall
Exploration Improving be upgraded in Venezuela. This Transport Refining and production process Marketing effort will create approximately 100 MBPD Improved 2,000 jobs in Venezuela during the The “Abreu e Lima” Oil 200 MBD Extra heavy construction phase – expected refinery will be located Abreu e Lima Refinery Brazil Oil to last 3 years- and 600 direct at Suape Industrial Port Production Market 8°-10° API 100 MBPD Improving Improved jobs during operation. Complex, in Pernambuco, Brazil Process Center Marlim International Orinoco-Apure Edge market Northeastern region. This Brazil and Venezuela complex will be built on 13,500 Why Pernambuco? adequate port for the refinery. On become stronger hectares comprising the other hand, Pernambuco has undeveloped areas as well as In Brazil, the State of the labor force and infrastructure During the ground breaking port, industrial and trade Pernambuco has been ranked needed to address the Refinery ceremony for the Pernambuco facilities. Available utilities as the second fuel consumer project performance needs refinery, Hugo Chávez, President include water supply, in the Northeastern market, generating no significant costs, of the Republic of Venezuela, transportation, communications, just second to Bahia, and is while showing less fragile highlighted that Venezuela is no power supply, security and currently showing a significant environmental features than longer looking North and has marine control, besides having growth of oil byproducts other areas that were assessed. started to navigate the journey access to the Atlantic Ocean. All demand, particularly diesel of integration and union with these features make it a strategic and LPG. The Suape industrial The Brazilian Northeastern the people of the South. point to build a refining facility. area –in operation for more region accounts for 19% of Petrobras has a fuel distribution than 25 years– located in that total demand for oil byproducts “Now, Venezuela navigates toward yard in this same site. State has enough available in the country, and has only the South”, stated the Venezuelan surface to build the refinery, as one refinery in the State of Head of Government when The first land lot allotted for well as –according to Brazilian Bahia. In addition, if we take pointing out energy integration building the first phase of authorities– the appropriate into account that shipping projects currently developed by the refinery is located near features for performing oil byproducts is more expensive Venezuela with other countries Av. Portuaria, 4 Km. away industrializing activities. than processing crude oil near such as Argentina, Uruguay, from the Suape Port, in Likewise, ocean conditions serviced markets, this refinery and Brazil, among others. the Industrial Complex. enable the building of an would also bring costs down.
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COUNTRY’S’ UNION » Strengthening Integration Venezuela, fifth pillar of Mercosur
During the Southerm Common Market Summit, PDVSA and ANCAP, the Uruguayan Oil Company agreed on initiating the technical and economic feasibility study to expand
La Teja refinery and create Presidents reaffirm consolidation of regional block of nations. an oil fund to support ugo Chávez Frías, President “For us, there is no better day for various energy projects Hof the Bolivarian Republic of Venezuela to join MERCOSUR” stated Venezuela, together with the presidents President Hugo Chávez, who also of Argentina, Brazil, Paraguay and thanked the presidents of the other Uruguay, the four South Common member countries, Tabaré Vázquez Market member countries (MERCOSUR (Uruguay), Néstor Kirchner (Argentina), for its acronym in Spanish) formalized Luiz Inácio Lula da Silva (Brazil) in Montevideo, Uruguay, the joining of and Nicanor Duarte (Paraguay), for MERCOSUR Venezuela as 5th full member accepting the request to join this block of this regional made by the Venezuelan Government Venezuela Energy map integration block. seven years ago, in December 1998.
Colombia Population 275 million Ecuador Brazil Full and Associate members Surface Full members 12,774 square kilometers Peru Associated countries MERCOSUR was originally created by the four Non-associated signatory countries of the Asunción Treaty, on March Oil production Bolivia 5.48 million barrels per day 26th 1991: the Republic of Argentina, the Federative Republic of Brazil, the Republic of Paraguay and the Paraguay Refining capacity Eastern Republic of Uruguay. 4.9 million barrels (including the Citgo Petroleum Corporation installations) Now, the Bolivarian Republic of Venezuela, backed by governments Argentina of Presidents Néstor Kirchner in Argentina, Luiz Inácio Lula da Silva Oil reserves Uruguay 327,000 million barrels in Brazil, Nicanor Duarte in Paraguay, and Tabaré Vázquez in Uruguay, has (including the Orinoco Oil Belt) Chile become a full member of this regional integration block.
Coal production Currently, MERCOSUR country members are the following: 23 million tons
Republic of Bolivia (1997) Republic of Chile (1996) Republic of Colombia (2004)
Electric power generation Republic of Ecuador (2004) Republic of Perú (2003) 574,000 million kilowatts on hour
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On March 26th, 1991, the Republic During the 29th MERCOSUR Presidents To place Venezuelan coke of Argentina, the Federative Summit, Rafael Ramírez, Minister of in Uruguayan markets. Republic of Brazil, the Republic of Energy and Petroleum and PDVSA Paraguay and the Eastern Republic President, and Daniel Martínez La Teja refinery is owned by ANCAP of Uruguay signed the Asunción President of the National Fuel, Alcohol and is located in the South of Treaty, through which the South and Portland Administration (ANCAP) Uruguay. The expansion project Common Market was created. agreed on seven commitments in the foresees installing a module with area of energy and social projects: enough capacity to process MERCOSUR member countries share 50,000 barrels of oil per day. values that find expression in their own To initiate technical and economic democratic and plural societies, which feasibility studies for La Teja The Ethanol –a carburant agent defend fundamental freedoms, human refinery expansion project. of vegetable origin needed to rights, environmental protection and produce gasoline– manufacturing sustainable development, and in their To produce Ethanol in the southern project already has 7 million dollars, commitment to democratic consolida- country, to be used in gasoline contributed by Venezuela to an Oil tion, juridical security, the fight against production in Venezuela. Fund created to finance ANCAP poverty and the economic and social energy initiatives in Uruguay. development under equal conditions. To purchase Uruguayan cement. These resources will be used to La Teja will be expanded To provide technical assistance to make changes needed in the current the Venezuelan cement industry. industrial plant located in Bella Union The Venezuelan and Uruguayan oil –a town in the Uruguayan Department State Companies executed important To create two funds, one for of Artigas– and to install ferment- trading agreements and created social development, and ing units, storage tanks, distillation two funds, one to finance social the other to support ethanol columns and alcohol dehydrators. projects and the other to support and cement production. ethanol and cement production.
Petrosur » Montevideo Statement
The gas pipeline would start from Besides this new office, PDVSA Venezuela, go through a significant has other offices with similar part of Brazilian territory, first importance in Brazil and Argentina. to Manaos, then the North and Northeastern regions, to go on “This office means a strategic step towards the Southern region, under the integrationist perspective towards Buenos Aires and, fostered by the Bolivarian then Montevideo. Approximate Government”, pointed out uring MERCOSUR summit held Republics in the South American cost of the project has been Alejandro Granado, the corporation Din Montevideo, Uruguay, the region to join this initiative that estimated at 12 billion dollars. Vice-President in Montevideo, governments of Argentina, Brazil will benefit all peoples under adding that joint projects on and Venezuela bound themselves Petrosur, as the energy integration Office in Uruguay energy matters to be held between to complete the South American platform for the region. Venezuela and Uruguay will be gas interconnection project, channeled through that office. as a decisive step for regional In order to bring forward the integration. Presidents Néstor project, the Ministries of Energy Trade relations particularly energy Kirchner, Luiz Inácio Lula da Silva, and Petroleum of the Bolivarian relations between Caracas and and Hugo Chávez signed the Republic of Venezuela; of Federal Montevideo have become closer, Montevideo Declaration instructing Planning, Public Investment through various agreements their ministers with competency on and Services of the Republic including one for Venezuelan fuel energy matters to initiate feasibility of Argentina; and of Mines and supply to the Southern country studies for the South American Energy of the Federative Republic that contemplates payment of Gas Interconnection Project. of Brazil will create work teams, Petróleos de Venezuela opened a portion of the invoice with that will submit monthly reports a trading office in Montevideo, goods and services such as In this document, the heads of about progress of the study. Uruguay, during the 29th cement, ethanol and cattle. government also invited other MERCOSUR Presidents Summit.
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TRADE » Contracts signed with 4 countries in the Caribbean Eastern Arc Technical Supply Agreements strengthen Petrocaribe
DVSA entered into six framework These agreements were reached Zero discounts Pagreements with Dominica, during the Petrocaribe Technical- Belize, Saint Christopher and Nevis, Trading Work Sessions organized by Adolphus Lard Low, the head of and Saint Vincent and The Grenadines PDV Caribe, operating branch of the Economy in Saint Vincent and the to directly supply oil by-products to the Agreement, as part of the negotiations Grenadines, thanked the Government Eastern Caribbean Arc, all under the with representatives from various of President Hugo Chávez and the Petrocaribe Cooperation Agreement signatory countries. Venezuelan people for such initiative signed in Puerto La Cruz, Venezuela, as sharing their hydrocarbon resources last June 29th and ratified through Jamaica and Cuba had previously with Caribbean countries. bilateral agreements signed in Montego signed supply agreements Bay, Jamaica, on September 6th. and therefore must be added Lard Low explained that the Petrocaribe to countries listed above. Agreement does not foresee crude oil
BROTHERHOOD with the Caribbean
LPG to Saint Vincent PDV Caribe President; Asdrúbal a symbol of the esteem and related to infrastructure and The Grenadines Chávez, PDVSA Director and PDV kindness of the Venezuelan under the Petrocaribe Caribe Vice-President, and Jesús people”. He thanked PDVSA for its Cooperation Agreement. Villanueva, PDVSA Director and effort to bring fuel in a direct way PDV Caribe Director were present to all the people in those islands Asdrúbal Chávez, PDVSA Director when the first shipment arrived. of the Saint Vincent and The and PDV Caribe Vice-President Grenadines archipelago. and Reginald Austrie, Dominica Granado stated that the LPG Minister of Energy were present Saint Vincent and The Grenadines shipment delivery “is an Venezuelan Tank in Dominica and talked about legal, technical received the first Liquefied authentic evidence of Petrocaribe and social aspects related to Petroleum Gas (LPG) shipment implementation, as a result the agreement, as well as about under the Petrocaribe Agreement. of the first agreement signed establishing a mixed company Last December, 7 thousand 200 in Puerto La Cruz, and is now between PDV Caribe and the pressurized containers (cylinders), showing concrete results within Dominican State company. with 10 kilograms of LPG each the framework of regional arrived at Campden Park Port, energy integration, for the “With the arrival of this tank we on board of the ARBV-T64 purpose of benefiting Caribbean are activating mechanisms to vessel owned by the Navy of the communities”. establish a storage center for huge Bolivarian Republic of Venezuela. With the arrival of the first fuel fuel volumes in Dominica, due to Ralph Goncalves, First Minister of storage tank at Dominica from its strategic geopolitical situation, Alejandro Granado, refining Saint Vincent and The Grenadines Venezuela, Petróleos de Venezuela and distribute from there to other Vice-President of PDVSA and stated “this first shipment is started to fulfill commitments
Contact with the New PDVSA • January 2006 Contact Contact with the New with the New PDVSA PDVSA Cuba Already, 6 Caribbean countries are receiving Belize Jamaica Saint Kitts and Nevis oil byproducts from Venezuela under Dominica Caribbean Saint Vincent and special payment terms, Sea The Grenadines eliminating additional Atlantic Ocean
increases due to Venezuela Pacific intermediaries Ocean
Integration with solidarity sales at low prices, but an oil supply under special financing conditions.“We The Petrocaribe agreement sets Topics are not receiving oil at a discount, we forth the Venezuelan commitment to addressed in are rather receiving funding intended to provide technical support as needed these meetings included help our economies”. by each signatory country, in order to technical aspects related to materialize those precepts related to opportunities to optimize transportation In turn, Reginald Austrie, the Dominica hydrocarbon supply, distribution and costs, maritime logistics, as well as Minister of Energy, deems that the trade in the Caribbean, on the basis of assessing volumes, qualities and Petrocaribe initiative will be recorded solidarity among people from different prices of hydrocarbons to be supplied by history as a foundation for energy countries, economic complementarity by Venezuela. cooperation and complementarity and fair and balanced access to among countries. energy resources.
islands in the eastern arc”, pointed hydrocarbon shipments made the complementarity in the Haiti will be included out PDVSA director. under the Petrocaribe agreement. transportation field”. A PDVSA commission led by Weighing approximately 33 In turn, Montero thanked the Alejandro Granado, Refining tonnes, the tank to store diesel President of the Bolivarian Vice-President and PDV Caribe was shipped in a Venezuelan Republic of Venezuela, Hugo President went to Haiti to evaluate Navy vessel last October 28th Chávez, for the Petrocaribe mechanisms that would allow from El Palito refinery, in the initiative for the benefit of the this Caribbean country to join State of Carabobo and arrived at peoples of the region. Petrocaribe, as announced by Woodbridge Bay Port, in Dominica Hugo Chávez, President of the on November 2nd. This agreement sets forth the Bolivarian Republic of Venezuela. The agreement was subscribed basic outline of the agreement to Cuban-Venezuelan by Álvaro Montero, advisor to the be signed by Venezuela and Cuba The commission held meetings maritime integration Cuban Ministry of Transportation, in the short term and intended with the Venezuelan diplomatic and Asdrúbal Chávez, PDVSA to provide efficient, safe and representation in Port au Prince Petróleos de Venezuela S.A. Director and PDV Marina economic transportation to all in order to define actions aimed (PDVSA) and the Cuban Ministry President, who pointed out the Petrocaribe signatory countries. at benefiting the Haitian people of Transportation entered into an importance of such agreement with safe and reliable hydrocarbon integration agreement related to “to bring greater more benefits to The agreement foresees supply at fair prices, under the maritime transportation in order the people in Caribbean countries. using the PDVSA and Cuban regional energy integration to set the basis for creating a This agreement continues the fleets, although using vessels strategy. bi-national company to handle energy integration process and from other companies has not been discarded.
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OUTLINES » PDVSA changes relationships with suppliers Social Production Companies: a step towards 21st century socialism
ocial Production Companies (EPS Sfor their acronym in Spanish) are economic entities devoted to the supply of goods or services where work has an inherent and authentic meaning, and has not been alienated, where there is no social discrimination at work or regarding any kind of work, no privileges related to hierarchical positions, but is only a substantive equality among all members, based on participative and protagonistic planning under a State or collective property regime, or a combination of both.
Some part of the surplus generated by the EPS, should be distributed with equality among its members. Any surplus is to be distributed in the following order: Petróleos de Venezuela has created the Social 1 Self-sustainability fund Production Companies Register (REPS for its 2 Labor fund 3 Fund for Social Development acronym in Spanish), in substitution of the current Programs 4 Fund to Promote New Social Contractors Auxiliary Register (RAC for its acronym Production Companies 5 Among all collective equity in Spanish), in order to transform production and owners business relations among goods and In order to foster this type services providers in the oil sector of organization, Petróleos de Venezuela has created the Social Production trillion 272 billion bolivars, In 2004, of the total amount paid to Companies Register (REPS that is, 83% of the total. In work and service providers, 68 drilling for its acronym in Spanish), addition, payments made to and production companies billed 8 which are to substitute cooperatives just added up to trillion bolivars, equivalent to 66% of the current Contractors 117.7 billion bolivars, only 1% the total amount paid by the industry Auxiliary Register of the total amount paid by the that year. (RAC for its acronym Corporation. in Spanish), in order to EPS Register (REPS) change production and business This is contrary to the strategy set relations among goods and services forth in Decree N° 2,371 issued on As activities related to Social providers in the oil sector. May 13th, 2003, that 20 to 25% of the Production Companies development State purchasing capacity must be represent the will of PDVSA Current suppliers’ conditions allotted to the Small and Medium-Sized shareholder and Board of Directors Companies (SMC) and to Cooperatives to ensure a higher commitment and In 2004, the amount paid by PDVSA to to buy industrial works and services, contribution to the development of its works and service providers added low technological complexity goods construction, service and goods up to 12 trillion 833.5 billion bolivars; with a high with national integration companies, PDVSA has created the of which 148 companies billed 10 percentage. new Social Production Companies
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Register (REPS), abolishing the current 160 participants in the First Social Production Companies Show Contractors Auxiliary Register usually referred to as RAC, its acronym in PDVSA boosts social economy with loans Spanish. for over Bs. 6,900 million EPS must meet the following conditions: President Chávez handed out the first checks in Tía Juana, Zulia state.
Take part in community projects through contributions to PDVSA PDVSA “wanted strategy of popular redistribution Social Fund, or providing goods no more briefcase of oil income. and services. companies, or false cooperatives. Ramírez recalled that purchases Contribute to community Here, everyone made in the country by PDVSA production, distribution and service must receive in 2004 added up to 12 trillion companies’ development. A total of 164 Social Production the benefits. Anyone setting bolivares, of which 80% was Companies (SPC) took part in a labor commitment with the allotted to 148 companies. This All other companies that would get filed the first SPC show held in Tia Corporation must assume a social fact “represents a very high in the register shall also take part in Juana, State of Zulia, inaugurated commitment with all the other concentration of all goods and the EPS program, and should meet the by President Hugo Chávez, last Venezuelans who did not have service rendering activities in following conditions: November 27th. the privilege of joining the oil a group of companies” and company”. this is totally anti-democratic Contribute to PDVSA Social Fund. In the closing act of the show, and contrary to what the New which was opened to the public Loans granted during of this PDVSA is fostering: the political, Submit a Social offer in tender until November 30th, Rafael show to representatives from 12 economic and social involvement processes, under a concept based Ramírez Minister of Energy and Social Production Companies of the Venezuelan people in oil on the need to perform works, Petroleum and state oil company exceeded 6,906 million bolivares. activities. render services and/or provide President, stated that the New Such loans are part of the goods that will address community needs, in order to ensure their harmonic and sustainable companies registered in the REPS and Financing Fund development. shall focus on developing projects to benefit communities. Likewise, this Taking into account that to strengthen Develop and accompany small fund shall be managed through a and consolidate EPSs it becomes companies and EPSs, including fiduciary entity set up under a trust necessary to have an effective support to develop systems, contract. mechanism to leverage this type technologies and establish ongoing of companies, the creation of a programs to help their insertion in 100 million dollar Financing Fund the productive system. was approved to promote them.
Set up consortiums with medium The amount approved represents a size companies and EPSs in order seed capital that will allow for EPS to make them technologically capitalization through recoverable stronger, thus promoting an loans granted under special conditions.
Incremental National Added Value The Vice-President of Exploration and Production, Luis Such loans will expedite such tasks as and a higher involvement in fulfilling Vierma, also participated in the First EPS Showroom. infrastructure, capital assets provision, needs of the oil sector operating accessing technologies, recruiting areas. Projects to be financed by the Fund qualified human resources and the will be identified by the relevant Mobile necessary training to strengthen these Contribute to the development of Cabinets, and further approved by the companies until they can reach their community production, distribution Executive Branch of Government. economic autonomy and improve their and service companies’. overall operational efficiency, which will The contribution to be made to the further allow them to fulfill their liabilities Social Fund Social Fund shall be determined on with the Fund, thus ensuring financing the basis of a minimum percentage for other EPS. The EPS Social Fund is intended of contracted amounts, as per a to receive contributions from those predetermined scale.
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CONVERSION » A measure leading to savings of 3 billion dollars annually Mixed Companies to exercise full sovereignty over oil resources
On January 1, 2006, Petróleos de Venezuela regained sovereign control over 32 local oil fields. Given to multinational companies in the 1990’s under the concept of operational agreements, the conditions proved unfavorable to the Republic
n keeping with the mandate of the approved by the National Assembly in IMinistry of Energy and Petroleum, the next three months. on January 1, 2006, Petróleos de Venezuela (PDVSA) recovered full Thus, Venezuela has been able to Venezuelan Mixed Capital Companies will produce sovereignty over 32 oil fields which, leave behind the terrible years of the more than 500 thousands oil barrels per day. back in the 1990’s, had been awarded 1990’s and is once again the first in 3 bidding rounds, and by direct point of reference for all oil exporting Energy and Petroleum Minister and allocation under the concept of countries. PDVSA President, Rafael Ramírez. operations agreements. The bad business deals of the 90’s In synthesis, these agreements were Following a negotiation process sched- used to disguise bogus concessions, uled to end on December 31, 2005, After conducting a legal and technical which were illegal as they had not been 19 multinational companies agreed analysis, the Ministry of Energy and endorsed by Congress at that time. with PDVSA to legalize their activities Petroleum instructed PDVSA in April in Venezuela by converting to Mixed 2005 to review accounts of operations In the first round (1992-1993), 3 Companies, a form of association pro- agreements, given that these accounts contracts were awarded; in the second vided for in the current Hydrocarbons presented direct losses of 250 millions round (1993-1995), tenders were Organic Law governing the participa- dollars for the state-owned oil company invited and awards granted for 11 more tion of private capital in the petroleum for 2004 alone. areas; and in the third and final round industry. (1997), three operation agreements The analysis also revealed that these were added to the list. The international oil companies signed agreements were not in keeping with transition agreements in which they the 2001 Hydrocarbons Organic Law The oil opening process pledge to comply with Venezuela’s or with the previous legal framework. is now History income tax and hydrocarbon laws and with Seniat regulations. Meanwhile, it “The clauses governing fees based on In referring to the recovery of 32 fields should be noted that the elimination of the volume and price of hydrocarbons early in 2006, President Hugo Chávez the concept of operations agreement produced in the operation areas and stated, “On the 1st of January, a new will lead to net savings of 3 billion agreed upon with the companies development took place. Venezuela dollars in PDVSA’s cost budget for engaged in these areas violated the assumed control over thirty-two 2006. very nature of a simple service contract, operation agreements - that is, 32 oil which was the concept provided for in fields. These were under the control The Venezuelan State will have a major- the 1975 Organic Law reserving control of multinational companies. The ity share of over 60 percent in the new of the hydrocarbon industry and trade governments of the time approved the mixed companies after they have been to the Venezuelan State,” declared processes in which they were awarded.
12 Contact with the New PDVSA • January 2006 Contact Contact with the New with the New PDVSA PDVSA
Mixed Companies
Coro Caribbean Sea Maracaibo 5 3 6 13 14 8 Caracas 32 9 21 31 7 Barcelona 28 30 2 11 12 San Carlos 25 20 Maturín 4 10 19 17 24 26 31 15 22 27 1 18 23 16 Barinas Orinoco Oil Belt Field In Association with PDVSA Field In Association with PDVSA Field In Association with PDVSA
Petrobras Cía. Gral. de Combustibles
Suelopetrol Hocol Harvest Vinncler Hocol Petrobras
CHRONOLOGY of the process These companies paid no royalties and, furthermore, any investment they made August 17, 2005: October 24: Petroleum had to be returned to them in dollars. First 13 agreements and Energy Minister and That is now history.” signed: Repsol YPF PDVSA President, Rafael (Mene Grande, Ramírez, swears in 32 Meanwhile, Minister Rafael Ramírez Quiriquire and Guárico Transition Executive stated that the conversion process Occidental); China Committees responsible From left to rigth: Bernard Mommer, PDVSA’s Director; “is a goal that we have achieved.” He National Petroleum for negotiating the Rafael Ramírez, Minister and President of PDVSA and had repeatedly declared that the 500 Corporation (Caracoles conditions under which Eulogio Del Pino, PDVSA’s Director. thousand barrels of oil being produced and Intercampo Norte); the Mixed Companies on the basis of operation agreements Hocol (B-2X.68/79 y will be set up. Mixed Companies 30 percent as a “were the most expensive barrels of our B-2X.70/80); Harvest minimum. national production.” He explained that Vinncler (Monagas Sur) December 1: Shell The Hydrocarbons the production cost of the agreements and Vinncler Oil & Gas (Urdaneta Oeste), British Organic Law clearly The State maintains had reached 20 dollars per barrel (Falcón Este); Inemaka Petroleum (D.Z.O. and simply provides the principle of tax while the cost of the country’s own (Kaki and Maulpa); and Boquerón) and for the participation of sovereignty, which production was barely 4 dollars. Suelopetrol (Cabimas) Compañía General de national and international is expressed in the and Open (Casma- Combustible (Onado) private capital in the payment of Income “What was happening? In a clear Anaco). converted. hydrocarbon exploration Tax at a rate of 50 vision to privatize our oil industry, 500 and production percent for oil-related thousand barrels of so-called marginal September 28: December 19: Transition business. It is through activities. fields were awarded; at the time, Agreements signed with agreements signed Mixed Companies which however, these fields were producing 80 Petrobras (Acema, Mata, with Eni (Dación), Total have, among others, the The State will be the thousand barrels per day. One example Oritupano-Leona and La Oil & Gas (Jusepín), following features: absolute majority is the Boscán Field, which was awarded Concepción). West Falcón Samson stockholder, a directly to Chevron” Ramírez stated. Hydrocarbons (Falcón The State maintains status which - with October 6: Perenco Oeste) and Chevron (LL- full sovereignty over the payment of 30 With the Mixed Companies, the Ministry agreement signed 652 y Boscán). oil fields. Its property percent in royalties of Energy and Petroleum will exercise (Ambrosio and is not transferable. and an Income Tax of full sovereignty over this natural Pedernales); Tecpetrol December 30 2005: The fiscal expression 50 percent - will make resource, full jurisdictional sovereignty (Colón) and Teikoku Oil Repsol YPF reaches of this right is the it the guaranteed and fiscal control over the production (Guárico Oriental and agreement with PDVSA oil royalty which, recipient of at least that had been lost as a result of these Sanvi Güere). on transfer of its last in this case, will 82.5 percent of the operational agreements. field, Quiamare-La Ceiba. be equivalent to profits earned.
Contact with the New PDVSA • January 2006 13 Contact Contact with the New with the New PDVSA PDVSA
gas » Go-ahead given for phase B Rafael Urdaneta Project yields $106.8 million in bonds
With this transparent and The legal base for the selection In my 20 years of experience, I successful process, we are giving process strengthens the have never seen such a clear and a clear signal of the roles and spaces open foundation of the Rafael Urdaneta Project. transparent process. We were provided to national and international private We have high expectations about with precise information on a regular basis, capital in the development the development of these areas and all our questions were of our projects appropriately answered
Rafael Ramírez Toshiaki Takimoto Alí Moshiri Minister of Energy and Petroleum Manager of New Business President of Chevron Exploration and President of and Production, Latin America
A total of six blocks in the Gulf of Venezuela were awarded by the Ministry of Energy and Petroleum for the exploration and subsequent production of non-associated gas. Enterprises from Brazil, Japan, Italy, Spain and Venezuela won during the second round. The areas included in phases A and B will guarantee an annual investment of 6 million dollars in social development projects
he selection process “With this transparent while the Petrobras International/ Tof companies for the and successful process, Teikoku Oil consortium of Brazil and Rafael Urdaneta project, we are giving a clear Japan, respectively, offered 19.5 million known as phases A and B, signal of the roles and dollars for the Moruy II block. However, yielded over 106. 8 million spaces open to national the best offer, amounting to 34 million dollars in bonds for the exploration and international private capital in the 399 thousand dollars, was made by Cardón IV Cardón III Chevron and production of non-associated gas development of our projects,” Ramírez Repsol YPF/ENI Venezuela of Spain Repsol YPF/Eni in blocks off the Gulf of Venezuela. stated after giving special recognition to and Italy, respectively for the Cardón IV In addition, the minimum exploration the Venezuelan company Vinccler Oil & block. Urumaco I program for both phases is expected Gas for having won the bid. Castillete NE II Gazprom to generate some 183 million dollars in The Cardón II and Urumaco III areas Vinccler investment. The selection process for phase B of were declared deserted. The amount the project, which consists of 5 blocks bid by the winning companies totaled Urumaco II Gazprom Last November 15th, Energy and (Cardón II, Cardón IV, Castilletes NE 61 million 287 thousand dollars, from a Petroleum Minister and PDVSA II, Moruy II and Urumaco III), began total of 94 million 175 thousand dollars President, Rafael Ramírez, announced on September 8 this year following the for all the bids tendered. Moruy II the winners of phase B of the Project announcement of the winners of phase A. Petrobras/Teikoku as Vinccler Oil & Gas, C.A., for the The licenses will have a duration of Castilletes NE II block; the Petrobras Balance 30 years, and the State will be able International/Teikoku Oil consortium to participate through Petróleos for the Moruy II area; and the ENI The Venezuelan enterprise, Vinccler Oil de Venezuela, with as much as 35 Venezuela/ Repsol YPF consortium for & Gas, offered 7 million 388 thousand percent, once the project is declared the Cardón IV block. dollars for the Castilletes NE II block, commercially viable. The gas produced
14 Contact with the New PDVSA • January 2006 Contact Contact with the New with the New PDVSA PDVSA
Falcón. Together, these blocks cover the selection process, which helps to an area of approximately 30 thousand strengthen the Rafael Urdaneta Project. square kilometers. “I am sure that we will be able to find large amounts of gas in the Gulf of In keeping with the law Venezuela. We have high expectations about the development of these areas.” Juan Francisco Clérico, President of Vinccler Oil & Gas, said that the After the Phase B results, the President selection process was in keeping with of Chevron Exploration and Production the law and that his company felt the Latin America, Ali Moshiri, stated that
The president of the Venezuela Bolivarian prospects of finding large reserves of “In my 20 years of experience I haven’t Republic, during the awarding of licenses for A gas, which would allow it to supply the seen a process so transparent and Phase in Paraguaná, Falcón state. local market and earmark surpluses clear. PDVSA gave us the necessary for export, was promising. “The first information and all of our questions will be used primarily to meet local phase of the minimum program were timely answered”. demand, with the surplus earmarked involves developing 500 kilometers of for export, as set out in the organic law 2D seismic and 300 kilometers of 3D governing gaseous hydrocarbons. seismic. Later on, we will be continuing with the second and third phases where In phase A of the project, 3 exploration we plan to drill 2 preliminary wells.” blocks were awarded to the Russian and American enterprises Gazprom Meanwhile, Gerson Faría Fernandes, (Urumaco I y II) and Chevron (Cardón general manager of Petrobras, pointed III). The winning bids received in out that the participation of the Brazil- both phases A and B of the project ian oil company in the Rafael Urdaneta amounted to 106. 8 million dollars, while Project was part of a process aimed at the overall amount offered was 150 complementing the integration agree- Energy and Petroleum Minister and President million 375 thousand dollars. ments between Venezuela and Brazil. of PDVSA, Rafael Ramírez, presented the “We have very high expectations as to certificates to the winning companies of B Phase. Development of the Rafael Urdaneta the presence of large deposits of hydro- field is part of the DeltaCaribe Project, carbons in the area,” he noted. one of the main axes of the 2006-2030 Plan Siembra Petrolera – or Petroleum Toshiaki Takimoto, Manager of New Sowing Plan – and consists of 29 Business, Teikoku Oil, underscored blocks, 18 of which are in the Gulf of his satisfaction with the legal basis of Venezuela and 11 in the north-east
Cardón IV Cardón III Repsol YPF/Eni Chevron
Urumaco I Castillete NE II Gazprom Vinccler
Urumaco II A Phase Gazprom B Phase
Moruy II Petrobras/Teikoku
Granted blocks in 2005 Falcón state
Contact with the New PDVSA • January 2006 15 Contact Contact with the New with the New PDVSA PDVSA
gas » Supply for the petrochemical industry guaranteed East and West interconnected by the ICO Project
The interconnection of gas transportation systems will help strengthen the social, economic and industrial development of these two Venezuelan regions
he gaseous hydrocarbons project Venezuela. Achieving this goal areas, as well as foster Latin American Tenvisaged in the government’s inevitably calls for the acceleration and Caribbean integration. Plan Siembra Petrolera –or Petroleum of every land-based and off-shore Sowing Plan– is a spearhead for gas exploration and production The ICO project, which involves meeting the demand for gas in project envisaged, as well as the interconnecting Venezuela’s Central- modernization of the Anaco area in Eastern (Anaco-Barquisimeto) gas
La Florida Station, Falcón state Anzoátegui state as a gas producer, transportation systems with that of the and the development of gas reserves West (Ulé-Amuay), is one of the major in the country’s central region. developments being undertaken by PDVSA Gas to guarantee the supply of During the 2006-2012 period, PDVSA gas to the Paraguaná Refinig Center, to plans to invest a total of 16 thousand partially meet demand in the Western 780 million dollars in major gas part of the country, foster economic projects. This will help meet domestic growth in the pipeline’s service areas, demand, contribute to build the provide liquids for export and, in the country’s new social, economic and long term, earmark supplies of gas for production model, maximize and Colombia and Central America. boost the value of gas resources, and encourage the endogenous and ICO is a project intended to support Paraguaná sustainable development of the service and strengthen the social and industrial Laying the pipeline CRP Venezuela’s La Vela Gulf Caribbean Front Río Seco Caracas
Ulé Jose Arichuna Barquisimeto Pto. La Cruz Morón New compression plants Anaco Los Morros Guico Atlantic Front New gas-pipeline segment completed Morichal Pipeline diameter: Altagracia 30 and 36 inches Gas-pipeline under construction Pto. Ordaz 16 Contact with the New PDVSA • January 2006 Contact Contact with the New with the New PDVSA PDVSA
development of Venezuela’s Central- EARLY victory Western region by means of domestic service area. This highlights the distribution networks operated by third social responsability aspects parties and by ensuring the ongoing and excellent performance of availability of supplies. The project also the project with regard to the seeks to cover the needs of the power environment, health, education, system of the national petrochemical local economy, road systems industry. and services, as well as cultural heritage. 51 miles of pipeline are ready, from La Vela to Río Seco, Falcón state. During the second quarter of 2004, work was started on this segment of the The start-up of the first 82 has been completed. Plans are In Altagracia de Orituco, Villa project in the Miranda municipality of kilometers of gas pipeline between underway to place this segment de Cura and Río Seco the needs Falcón state under the coordination of Río Seco and the La Vela Station into operation by November 2005. and potential of the community PDVSA Gas and with the participation of the Central-Eastern and Meanwhile, subsequent segments are being analyzed with a view of the national industry and of the Western Interconnection Project are reaching as far Morón. to promoting various core communities located in the vicinity of (ICO) represents an early victory endogenous development areas. the project. with these initial volumes of gas Compression plants being supplied to the Paraguaná Rescuing the past The project includes 300 kilometers of Refining Center (CRP). Morón: Central-coastal region 30 and 36 inch diameter pipe, to be of Carabobo state. With the support of PDVSA installed through the north of Carabobo, Thus, the ICO Project, which Los Morros: Located on the Gas, the Venezuelan Institute Falcón and Yaracuy states. In addition, seeks to link Anaco-Barquisimeto, outskirts of Villa de Cura, for Scientific Research (IVIC), three compressor plants will be built in Ulé-Amuay, CRP and the Western Aragua state. the Francisco de Miranda Morón in Carabobo state; San Juan de region with this gas pipeline, Altagracia de Orituco: North- Experimental University (UNEFM), los Morros and Altagracia de Orituco, in is already proving its worth by eastern tip of Guárico state. through the Archaeological, Guárico state. connecting the gas producing Anthropological and area of the fields of East Falcón by Paleontological Research Center, 82 Km of pipeline completed means of the network of stations and the Cultural Heritage Institute of Río Seco, La Florida, Agua Viva, are engaged in activities aimed
La Florida Station, Falcón state The first stretch consists of 82 Coro and La Vela, which are all set at rescuing the archaeological kilometers of 30 and 36-inch pipe to start operation. heritage of the area where the ICO running from La Vela to Río Seco, in project is being developed. the Miranda municipality, to South- Early start-up Social Development East Coro in Falcón state, a region that borders with Zulia, Lara and Carabobo. The Río Seco-La Vela stretch, The ICO Project has implemented The work includes two receiving- which transports gas coming a Social Investment Plan aimed transfer trap stations and three from the fields of East Falcón, by at fostering the socio-economic separation stations, to handle between means of the La Vela Vinccler gas integration and development 40 and 100 million standard cubic feet receiving-transferring station to of the communities located in Bowl found in XIX century settlements in Falcón. of gas per day from East Falcón fields. the Paraguaná Refining Center, the vicinity of the gas pipeline
Paraguaná Laying the pipeline CRP The ICO is a highly important project La Vela Venezuela’s for the national oil industry, because Gulf Caribbean Front it will help overcome the gas deficit Río Seco of the western region and provide higher operating reliability to the Caracas Paraguaná Refining Center.
Ulé Jose Arichuna Barquisimeto Pto. La Cruz Morón New compression plants Anaco Los Morros Guico Atlantic Front New gas-pipeline segment completed Morichal Pipeline diameter: Altagracia 30 and 36 inches Gas-pipeline under construction Pto. Ordaz Contact with the New PDVSA • January 2006 17 Contact Contact with the New with the New PDVSA PDVSA
Petrotips PDVSA in figures 2005*
Production on the road to recovery 5 million barrels for the Asian market in Venezuela’s Western region
Proven Reserves
Crude 80 Bn Barrels
Gas 150.4 tcf For the first time ever in the history PDVSA currently produces 1,158,800 of the national oil industry, PDVSA Venezuela’s production capacity barrels of crude a day and a little over simultaneously sent three shipments Crude 3.9 m BPD
1.1 billion cubic feet of gas in the of 5,354,756 barrels of crude and Gas 6.9 Bn cf Western region of Venezuela. These fuel to China and Singapore in three LNG 0.25 m BPD figures confirm the gradual recovery VLCC (Very Large Crude Carriers). of that area which had a deficit of 100 Refining capacity thousand barrels of oil as compared As part of the country’s market In Venezuela 1.3 m BPD
to corporate estimates for this year. diversification trade policy, the VLCC Abroad 2.0 m BPD tankers, Great Lady and Elizabeth Total 3.3 m BPD Venezuela’s proven reserves of Maersk, departed for Singapore from crude and gas on the rise PDVSA terminals in the Bahamas and Global income
Bonaire, respectively, with shipments 85.6 Bn US$ of fuel oil, while the “World Lion” left for * Preliminaries numbers China from PDVSA’s terminal in Saint Glossary Lucia, with a cargo of BCF 17 crude. m: Millions cf: Cubic feet
BPD: barrels per day Financial statement for 2003 MBD: Millions of barrels per day m cf pd: Millions of cubic feet per day submitted to SEC Bn US$: Billions US dollars
PDVSA President, Rafael Ramírez, recently announced an increase Quote of the month in the country’s proven reserves of crude and natural gas. He pointed Oil companies should follow out that crude reserves had risen from 77 billion to a little over 80.5 billion “the example set by Venezuela in barrels and recalled that, thanks to the helping its most needy customers. quantification and certification process Petróleos de Venezuela (PDVSA) Massachusetts recognizes of the Orinoco Oil Belt reserves, 235 and its affiliate, PDVSA Finance, the specific benefit from the billion more barrels will be added to Ltd, submitted to the US Securities Venezuelan government and this total. Ramírez went on to say that and Exchange Commission (SEC) applauds its generosity. Thank you proven gas reserves have climbed the 20-F documents, which include from 150 trillion to 151.4 trillion cubic the audited financial statements for very much Venezuela feet, an amount that is expected to rise the year 2003, in keeping with the ” by another 100 trillion cubic feet given United States Generally Accepted The Boston Globe Editorial, November 23, 2005, the development of off-shore reserves. Accounting Principles (US GAAP). on the beginning of low price diesel deliveries to US communities.
CRUDE GAS REFINING (Ven.) EXPORTS EXPORT BASKET OPERATION INDICATORS 3,3 6,9 1,2 m b/d 2,3 $ 45,39 Annualized average 2005 (Venezuela/Isla per barrel m b/d bn cu ft Circuit) m b/d
18 Contact with the New PDVSA • January 2006 Contact Contact with the New with the New PDVSA PDVSA
RECOGNITION » Second most reliable institution in Venezuela PDVSA: the world’s third leading oil company etróleos de Venezuela (PDVSA) companies in the world, and is P rose to third position among surpassed only by Saudi Top ten the world’s 50 leading oil companies, Aramco of Saudi Arabia and Companies 2005 2004 according to an analysis conducted by ExxonMobil of the United Saudi Aramco 1 1 the specialized publication, Petroleum States. Thanks to the devotion Exxon Mobil 2 2 Intelligence Weekly, in its December and perseverance of our PDVSA 3 4 2005 issue. workers and to the strength and NIOC 4 3 excellence of PDVSA, the BP 5 5 This ranking is based on technical magazine Petroleum Shell 6 5 criteria, such as volume of reserves, Intelligence Weekly has ranked Total 7 8 production of crude and gas, refining our enterprise among the Chevron 8 7 capacity, and net sales and income. world’s three leading oil Pemex 9 9 companies.” PetroChina 9 10 The positive image of PDVSA is Source: PIW therefore being acknowledged both at Ramírez pointed out that national level and in the rigorous this information is vital to PDVSA, Likewise, PDVSA is the second analyses conducted by foreign particularly in the wake of the organization in terms of image and specialized media. oil sabotage. “The new PDVSA popular acceptance in Venezuela. emerges as a spiritually revitalized According to a study made by Energy and Petroleum Minister and institution with a strengthened Instituto Venezolano de Análisis PDVSA President, Rafael Ramírez, team of workers who have made de Datos, 80% of Venezuelans declared, “Petróleos de Venezuela extraordinary efforts to ensure the assign a high level of acceptance ranks third among the 50 oil recovery of the company’s activities.” to the National Oil Industry.
TO DIVERSIfY MARKETS » Enterprises sign Memorandum of Understanding Nynäs evaluates possibility of raising production of specialty crude oil
etróleos de Venezuela and Nynäs Nynäs, a 50/50 partnership between PDVSA and Neste Oil of Finland, PPetroleum held a workshop at the company’s facilities for the purpose of has interests in three specialized refineries: Nynäshamn and Gothenburg, beginning the joint project listed in the in Sweden, and Dundee, in Scotland Memorandum of Understanding signed by both companies. The memorandum contemplates evaluating the country’s The Memorandum of Understanding specialty lubricants and asphalt. The reserves and raising oil production, provides for a one-year survey of the Western Division would benefit through primarily with a view to meeting the Tierra Este Heavy Crude Exploitation the rapid inclusion of technology for the energy needs of Asian and European Unit along the Eastern coast of Zulia production targets set. markets, which are eager consumers of state to determine the possibility of specialty crudes. boosting production of hydrocarbons If the joint project proves to be which, because of their composition, successful, a joint venture will be set The event was attended by yield higher quality in the production of up through CVP to produce and market representatives of the Venezuelan asphalt and lubricants. specialty crude oil for the Asian Petroleum Corporation (CVP) and markets, particularly China. Information Intevep, both subsidiaries of PDVSA In this joint PDVSA and Nynäs effort, published about opportunities in China and by experts in the areas of Trade the Venezuelan state-owned company report the construction of and Supply and of Western Exploration would contribute crude reserves while approximately 1.8 million kilometers of and Production, which is responsible Nynäs, which is headquartered in roadway over a five-year period, an for the so-called Tierra Este Heavy Sweden, would provide advanced effort which will require significant Crude Exploitation Unit. technical know-how in the areas of amounts of asphalt.
Contact with the New PDVSA • January 2006 19 Contact with the New PDVSA
COOPERATION » Members of United States Congress urge oil companies to follow Venezuela’s example CITGO supplies fuel at lower prices to native Americans
What we want to do is to sell The expansion of this program directly to households without helps reaffirm Venezuela’s the use of intermediaries, commitment to the neediest particularly now in winter sectors of American society
Hugo Chávez Rafael Ramírez President of the Bolivarian Minister of Energy and Petroleum Republic of Venezuela and President of
September 17, 2005, during a visit to the Bronx, New York
In November 2005, the Venezuelan of the initiative, rules out the possibility Another 7 millions 988 thousands 587 gallons of government started an assistance that it may have been used for political heating oil will be distributed in the State of Maine, program in the state of Massachusetts reasons and that further states that United States of America. and plans to begin a similar “CITGO was the only oil company that he initiative undertaken by program in the Bronx, New York, readily provided this kind of assistance, TPresident Hugo Chávez of the in December. Subsequently, the which would be gratefully accepted Bolivarian Republic of Venezuela initiative could spread to other from any other oil company.” to directly supply fuel at low prices states, such as Delaware, Vermont, to poor communities in the United Connecticut and Pennsylvania. States continues to be a reality. 10 Massachusetts congressmen signed CITGO Petroleum Corporation, the Venezuelan example the exhortation document. US-based affiliate of Petróleos de Venezuela, signed an agreement The Massachusetts with the Maine Governor’s Office delegations of to supply 48 thousand low-income the US Congress families with 8 million gallons of sent a letter last heating fuel –some 30 million 240 December 19 thousand liters– with a 40 percent urging companies discount on the international price. to follow the example set by Venezuela’s This humanitarian program, which CITGO Petroleum also includes assistance in the form Corporation by of 900 thousand gallons supplied supplying heating fuel to the Penobscot, Passamaquoddy, at affordable prices Houlton and Mic Mac native American to poor communities tribes, as well as 120 thousand in the United States. gallons to 40 shelters for the poor in the state of Maine, accounts for a The document –signed by donation of 5.5 million dollars from the Congressmen– defends CITGO Petroleum Corporation. the humanitarian purposes
Contact with the New PDVSA 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: [email protected] Graphic Design: FIDES Imagen, C.A. Photography: PDVSA archive. Legal Deposit: If13820053502083. This publication may also be perused at www.pdvsa.com 20 Contact with the New PDVSA • January 2006