COMMODITIES: PDVSA and Mobil Make new Alliance

By Humberto Márquez Reprint | | Print |

Humberto Marquez

CARACAS, Sep 17 1996 (IPS) - The US oil company Mobil and the Venezuelan PDVSA pinned new flags on their international operations maps Tuesday, when they shook hands on a deal to produce 100,000 barrels of crude within the next six years.

The plan is to extract extra heavy crude in PDVSA oilfields, to transform them into medium crudes on the Caribbean coast, and finally refine them in Chalmette, in the United States.

Some 2.3 billion dollars of investment will be needed during the planned 35 year lifetime of the pact, with some 1.6 billion being spent in the first five years, to develop the infrastructure in Venezuela.

Mobil classed the new agreement as “an important part of our strategic plan in Latin America,” in the words of its vice- president Robert Swanson, after stressing the project would be producing gas and distributing fuel and lubricants in the region.

The company already has gas production projects in Argentina and Peru, he said, fuel distribution in Ecuador and Peru, and lubricants in Colombia, Mexico and Venezuela.

In Venezuela, Mobil won the concession to exploit the western La Ceiba oilfield in January, in association with Veba Oel (Germany) and Nippon Oil (Japan), a reserve estimated at one billion barrels of light and medium crudes at great depth.

For the State group PDVSA, the association with Mobil represents the fruition of its plans to incorporate the heavy and extra heavy crudes in the Orinoco Belt into its production potential.

These extremely dense crudes, at lower than 10 degrees API (American Petroleum Institute), cannot go directly to the refineries which develop fuel and lubricants and must be “matured” first.

The heavy crudes are the most abundant in the Belt, a 35,000 sq km strip which is believed to contain some 1.200 billion barrels, of which only 270 billion can be reached with known technology.

PDVSA, which currently produces some 2.5 million barrels of crude and condensates per day, has installed potential of three million barrels per day, which it aims to increase to five millions by around 2005.

According to its plans, the associations to extract crude in the Belt and to prepare them for conventional refineries or convert them should produce some 560,000 barrels per day.

To date, associations have been arranged with the US companies Mobil, Arco and Conoco, with a consortium of the French Total and the Norwegian Statoil-Norsk Hydro, and another is being studied with the giant Exxon.

All these projects follow the same outline: to extract 100,000 or more barrels per day of very heavy crude, transport it 300 km to the north to the industrial complex and port of Jose, where it will be transformed into a superior crude, and ship it from there to the international markets.

The association with Mobil implies negotiations for Lagoven, the PDVSA affiliate, to participate in the Chalmette refinery as “we are dealing with an integral business deal, which includes production, improvement and refining,” said Julius Trinkunas, director of the Venezuelan subsidiary.

PDVSA began an “internationalisation” programme including the association with foreign refineries and distributors in 1983. The company is currently owner, partner or manager of 16 refineries in the Americas and Europe, with the capacity to distill more than two million barrels per day.

In Venezuela, PDVSA has six refineries which can distill 1.2 million barrels per day, giving the group a total capacity of 3.36 million barrels per day.

PDVSA makes a gross income of 28 billion dollars per year worldwide, while Mobil turns over 60 billion.