Boston, MA -- (SBWIRE) -- 07/31/2012 -- BMI View: By supplying oil to Syria, Venezuela may have exposed itself to the threat of sanctions. The ill health of President Hugo Chavez ahead of elections in October 2012 also generates fresh uncertainty about the outlook for the country's oil production. The country has huge oil potential and there are signs that gas self-sufficiency can be achieved; this means that Venezuela is in a strong position, providing it can keep its political situation under control.

The key trends and developments in Venezuela's oil & gas sector are:

- In February 2012, Venezuelan energy minister and Petroleos de Venezuela (PdVSA) head Rafael Ramirez said that the company had established an investment plan worth US$236bn for the 2013 to 2015 period. In 2011, spending came in at US$10bn, well below the US$18.4bn target that had been set previously. Ramirez anticipates capital expenditure (capex) of US$15bn in 2012. PdVSA has vowed to end 2012 producing 3.5mn barrels per day (b/d) of oil - a rise of 0.5mn b/d on 2011 levels. The increase is to come primarily from projects in the Orinoco oil belt, where the company aims to produce 470,000b/d.
- In December 2011, PdVSA signed a contract with Italy's Eni and Spain's Repsol-YPF to buy gas from the Perla field, located in the country's largest gas discovery in the Gulf of Venezuela. Eni and Repsol will each hold a 32.5% stake in the field when production begins, with PdVSA holding the remainder, according to an e-mailed statement from Repsol. The companies plan to produce 3.1bn cubic metres (bcm) in 2013 and eventually reach a maximum capacity of 12.4bcm in 2019, according to Ramirez.
- Crude oil and liquids production in 2012 is anticipated to be slightly above the level recorded in 2011, with BMI forecasting 2.47mn b/d. By 2016, we forecast production to hit 3.02mn b/d of supply thanks to heavy oil schemes, with production to exceed 4.00mn b/d by the end of our 10- year forecast period in 2021. In terms of demand, we forecast 0.85mn b/d of consumption in 2012, with this set to reach 1.02mn b/d in 2021. Oil export potential is anticipated to climb from 1.62mn b/d in 2012, through 2.10mn b/d in 2016, to almost 3.05mn b/d by 2021.
- Oil production from joint venture (JV) projects between PdVSA and China National Petroleum Corporation (CNPC) in Venezuela is to increase ten-fold, from 112,000b/d to 1.1mn b/d, by 2014, according to Ramirez. President Chavez has signed a contract to secure a US$4bn loan from the China Development Bank, in order to boost output.
- Thanks largely to the Perla gas sales agreement mentioned above, Venezuela is forecast to see gas production hit 33bcm by 2016, climbing further to 44bcm by 2021. While there is scope for net export capability, we are anticipating that domestic demand will consume all of the available gas, but that Venezuela will no longer be a net gas importer beyond 2013.

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