Search

 

Cablegate: Private Sector Oil Production

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS CARACAS 000337

SIPDIS


SENSITIVE

NSC FOR TSHANNON
ENERGY FOR D.PHUMPHREY AND A. LOCKWOOD

E.O. 12958: N/A
TAGS: EPET ECON VE
SUBJECT: PRIVATE SECTOR OIL PRODUCTION

1. Sensitive but unclassified. Please protect accordingly.


------
SUMMARY
-------

2. (SBU) A document prepared following a December luncheon in
which private sector company representatives shared average
monthly production numbers for both oil and gas production
from their fields has given us a better idea of non-PDVSA oil
production in Venezuela. According to this document,
December production by the private sector totaled 963,629
b/d. This figure is then broken down to show 503,000 b/d of
production by the four extra heavy crude projects and 460,629
b/d from the various Operating Agreements. These numbers
support the 1 million b/d figure that is generally cited as
the assessment of private sector production. Private sector
production is ever more important as we believe it likely
that PDVSA's own production will continue to decline slowly.
This information may give us a basis on which to calculate
the extent to which the private sector can ramp up production
in 2004. End Summary.

----------
BACKGROUND
----------

2. (SBU) The difficulty of assessing Venezuelan oil
production (besides misstatements about the extent of PDVSA's
own production by GOV authorities) is increased by the number
and complexity of the business structures under which the
private sector, both foreign and domestic, operates. There
are currently 32 active "Operating Agreements" or
"convenios," granted in three investment "rounds" in the
1990's, under which a company provides financial resources,
infrastructure, operational skills and technology and is paid
by PDVSA on a fee-per-barrel-produced basis.

3. (U) Under another structure, the so-called "Strategic
Associations," four projects were developed to extract the
extra heavy crude of the Orinoco Heavy Oil Belt and then
convert it into synthetic crudes for the international
market. Hamaca, the joint venture between ConocoPhillips,
ChevronTexaco and PDVSA, and the fourth and last of these
projects, is already producing heavy crude. Its upgrader is
expected to come on line in the latter part of 2004.

4. (U) This multiplicity of projects and fields has made it
difficult to assess the actual production by private oil
companies, which has become increasingly important as
PDVSA,s own production is believed to be dropping. (Note:
This will become more complicated in 2005 when the first
production is expected from a field developed under a "Risk
Exploration Agreement" under which private companies took on
exploration risks in assigned fields. End Note) The private
sector has generally been credited with the production of
approximately a million barrels of oil per day, with both the
Strategic Associations and the convenios each believed to be
contributing about half.

-----------------------------
AND THE NUMBER SEEMS TO BE...
-----------------------------

5. (SBU) Econoff recently received a document prepared
following a producers luncheon in December in which the
company representatives present gave average monthly
production numbers for both oil and gas production from their
fields as well as a few operational notes. That information,
covering most but not all of the Operating Agreements, is
reproduced in para. 8 below.

6. (SBU) According to the document, December production by
non-PDVSA producers was as follows:

Operating Agreements Production:

-- Eastern Venezuela 207,511 b/d
-- Western Venezuela 253,118 b/d

Total 460,629 b/d

Strategic Association Production:

-- Cerro Negro 121,000 b/d
-- Hamaca 82,000 b/d
-- Petrozuata 120,000 b/d (est.)
-- Sincor 180,000 b/d

Total 503,000 b/d

GRAND TOTAL 963,629 b/d

As noted above, all the Operating Agreements were not
included in this document. South Monagas, a Round One block
operated by Benton-Vinccler, produces about 22,000 b/d.
Falcon East and West are small Round Two blocks operated
respectively by Vinccler and Samson.

-------
COMMENT
-------

7. (SBU) Most industry analysts believe PDVSA's own
production will continue to decline in 2004 unless a serious
investment and work program is implemented. In that case,
private sector production is ever more important. There are
limits, however, to the extent to which it can be increased.
For instance, on January 28 Joaquin Moreno, President of
Shell de Venezuela, informed econoff that production at
Shell's Urdaneta West field has increased to 54,000 b/d and
is "on its way to 60,000." When asked if production would be
60,000 by year end, he responded that it would probably be
only 55,000-56,000 b/d at the end of 2004 "because of the
difficulties of the reservoir." Urdaneta West produces a
desirable crude and Shell has been requested by PDVSA to
produce as much as it can. Other fields produce less
desirable crudes and their operators have received no such
requests. There are also technical constraints such as
pipeline and terminal capacity. Finally, the private sector
production, and particularly that from the extra heavy crude
projects, does not produce the same revenue stream for the
GOV as PDVSA's own production. In sum, the private sector is
not likely to provide a magic bullet to stabilize Venezuela's
production levels, at least in the short term. We hope,
however, to use this information as the basis on which to
calculate the extent to which the private sector may be able
to increase its production in 2004. End Comment.

8. (SBU) Production and operational notes follow below:

---------------------------------
FIELD LISTING BY INVESTMENT ROUND
---------------------------------

---------
ROUND ONE
---------

Guarico East ) Average production for the month was 280 b/d
with 60 percent water cut with 3 active wells. Also injected
370 barrels of water per day.

Pedernales ) Average production was 6,839 b/d of 22.6
percent API crude, 46.25 mscf/d of gas and 14.42 percent
water cut. Injecting 98 percent of the gas and 100 percent
of the produced water. Operates 21 active oil wells, 3 gas
injectors and one water injector. Plans to clean up 7 wells
with coiled tubing and perforate additional intervals in 3
wells during 2004. No plans for new drilling.

---------
ROUND TWO
---------

Boscan ) Average production for the month was 109,500 b/d as
compared with 115,000 b/d potential.

Colon ) Average production for the month was 21,094 b/d, 64
percent water cut and 12.1 mscf/d from 46 active wells.
Plans to drill 2 tertiary wells and 1 cretaceous well during

second half of 2004.

DZO (Desarollo Zulia Occidental) ) Average production for
the month was 14,799 b/d of 35-40 degree API crude and 0.3
mscf/d from 28 active wells.

Guarico West ) Average production for the month was 2,862
b/d with 40.1 percent water cut from 35 active wells and 43.4
mscf/d of gas from Copa Maloya Field.

Jusepin ) Average production for the block was 29,865 from
35,000 b/d potential of 35 degree API crude and 58.6 mscf/d
from 9 active oil wells, one water injection and three gas
injectors. Currently injecting 80.4 mscf/d in the western
panel with 3 gas injection wells. Plans to drills just one
well during 2004.

Oritupano-Leona ) Average production for the block was
47,500 b/d with 89 percent water cut and 23.1 mscf/d. Base
line production 8000 b/d. Plans to operate 1 drilling rig
for 17 development wells and 2 workover rigs.

Quiamare-La Ceiba ) Average production for the month was
14,100 b/d with 21 percent water cut and 24 mscf/d from 26
active wells. Injected an average of 3,800 barrels of water
per day. Currently negotiating gas price with PDVSA to
increase gas production to about 50 million.

Quiriquire ) Average production for the month was 16,257 b/d
with 26 percent water cut and 324 mscf/d for a gas delivery
target of 300 mscf/d from 50 wells. Injected an average of
5,709 barrels of water per day. Currently negotiating with
PDVSA to increase gas deliveries to an additional 50 mscf/d.

Sanvi-Guere ) Average production for the month was 2,220 b/d
with 62 percent water cut from 26 active wells.

Urdaneta West ) Average production for the block was 50,700
b/d (potential 54,200 b/d) from 43 active wells.

-----------
ROUND THREE
-----------

Acema ) Average production for the block was 3,400 b/d, 4.9
mscf/d and 45 percent water cut from 22 active wells.
Currently injecting 1,580 barrels of water per day.

Ambrosio ) Average production was 4,081 b/d of 30.6 degree
API crude, 9.84 mscf/d and 29 percent water cut, from 9 wells
on natural flow and 11 wells on gas lift.

B-2X 68/79 & B-2X 70/80 ) Average production for the two
blocks was 6,246 b/d of 22.4 percent API crude, 30.0 mcf/d
and 15 percent water cut from 111 active wells, for a base
line production for the month of 3,336 b/d.

Boqueron ) Average production for the month was 8,510 b/d of
35-40 degree API crude and 34 Mscf/d from 11 active wells.
Production declined from 22,000 b/d in 2002 to about the
current 10,000 b/d because of delays in the completion of a
gas injection project and asphaltine drop out in the wells.
Production had to be reduced to allow the reservoir to
re-pressurize. Currently injecting an average of 78 mscf/d
from 2 injectors.

Cabimas ) Average production for the block was 6,453 b/d
from a potential of 8,200 b/d of 20.6 degree API crude, 5.9
percent water cut and 9.6 mscf/d from 156 active wells. Base
line production 2,696 b/d.

Caracoles ) Average production for the month was 6,971 b/d
with a 63.9 percent water cut from 93 active wells. Base
line crude production, therefore, averaged 1,600 b/d.

Casma-Anaco ) Average production for the month was 802 b/d
from 2 active wells. Finished working on 2 wells with coiled
tubing unit; 1 tested salt water and the other is waiting for
workover.

Dacion/Ganso/Levas/Tortola ) Average production for the

month was 70,010 b/d of 19.6 degree API crude, 72 percent
water cut from 207 wells.

Intercampo N. ) Average production for the month was 22,046
b/d with 39.1 percent water cut from 132 active wells.
Drilled 2 horizontal development wells for acombined rate of
445 b/d and one vertical well to 6,686 feet with 23 b/d test.
Base line crude production was 3,300 b/d.
Plan to drill 33 development wells in 2004 and currently
preparing proposals for 8 additional development wells.

Kaki & Maulpa ) Average production from these two fields for
the month was 2,100 b/d of 44 degree API crude and 48 mscf/d
from 18 active wells. Currently injecting 39 mscf/d and 674
barrels of water per day.

La Concepcion ) Average combined tertiary/cretaceous
production for the block was 12,500 b/d, 38 percent water
cut, and 27.8 mcf/d delivered to PDVSA from 104 oil wells and
8 gas wells.

LL-652 ) Average production for the block was 9,580 b/d.

Mata ) Average production for the block was 5,100 b/d, 36.7
mscf/d and 65 percent water cut. Currently injecting 15.7
mscf/d and 9,410 barrels of water per day. Operating one
workover rig shared with Acema Field.

Mene Grande ) Average production for the month was 14,300
b/d with 52 percent water cut from 241 wells.
SHAPIRO


NNNN

© Scoop Media

 
 
 
World Headlines

 


Myanmar: UN Condemns Escalating Violence In Deadliest Day Of Protests So Far

In response to the killing of at least 18 protesters demonstrating against Myanmar’s military coup, the UN human rights office (OHCHR) on Sunday together with the UN chief, strongly condemned the “escalating violence” and called for an immediate end to the use of force... More>>

Syria: Economic Decline, Rising Hunger And Surging Humanitarian Needs

Syria’s fragile economy has “suffered multiple shocks” over the past 18 months, with its currency plummeting and joblessness swelling as people struggle to cover their basic needs, the UN Emergency Relief Coordinator told the Security Council ... More>>

OECD: Final Quarter Of 2020 Shows Continued Recovery In G20 International Merchandise Trade

G20 international merchandise trade continued to rebound in the fourth quarter of 2020 ( exports up 7.2% and imports up 6.8%), following the sharp falls seen in the first half of 2020, as lockdown measures affected trade globally. Although growth ... More>>


Focus On: UN SDGs


UNFCCC: Greater Climate Ambition Urged As Initial NDC Synthesis Report Is Published

UN Climate Change today published the Initial NDC Synthesis Report, showing nations must redouble efforts and submit stronger, more ambitious national climate action plans in 2021 if they’re to achieve the Paris Agreement goal of limiting global temperature rise by 2°C—ideally 1.5°C—by the end of the century... More>>


2021: Critical Year To ‘reset Our Relationship With Nature’ – UN Chief

During this time of “crisis and fragility”, the UN chief told the United Nations Environment Assembly on Monday that human well-being and prosperity can be vastly improved by prioritizing nature-based solutions. Painting a picture of the turmoil ... More>>


Paris Agreement: UN Secretary-General António Guterres To Mark U.S. Reentry With Envoy For Climate John Kerry

Watch live at webtv.un.org UN Secretary-General António Guterres will join U.S. Special Presidential Envoy for Climate John F. Kerry at an event marking the United States’ reentry into the Paris Agreement this Friday. The discussion with the Secretary-General ... More>>