BMI View: W e maintain our downbeat outlook for Venezuela's oil and gas sector , d espite vast below- ground potential and ambitious production plans by state-owned P d VSA . We expect Venezuela to underperform , given the large scope of above-ground challenges, including excessive political interference, chronic underinvestment, an unattractive operating environment and the precarious financial situation of PdVSA . Sustained weakness in global oil prices will deteriorate produc tion growth prospects as P d VSA and international investors face declining revenues and a limited amount of available capex funds.
|e/f = BMI estimate/forecast. Source: OPEC, EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||2,548.0||2,544.0||2,342.6||2,234.3||2,193.1||2,162.8||2,142.9|
|Refined products production, 000b/d||1,163.6||1,140.3||1,060.5||1,071.1||1,087.1||1,108.9||1,123.3|
|Refined products consumption & ethanol, 000b/d||663.0||594.0||558.4||541.6||547.0||555.2||565.2|
|Dry natural gas production, bcm||21.9||22.8||24.2||25.3||26.0||27.0||27.8|
|Dry natural gas consumption, bcm||14.3||16.7||18.8||20.0||20.6||21.4||22.0|
Latest Updates and Key Forecasts
Venezuela will remain in a deep recession over the coming quarters as a result of low oil prices and severe macroeconomic mismanagement. While gradually rising oil prices will temper the depth of the recession over the coming quarters, substantial improvements will depend on the implementation of wide-ranging reforms.
Crude production declines accelerated over the course of 2016 H116, with direct communication data from OPEC showing a decline to 2.32mn b/d in August, a 12.1% decline over last year. Secondary sources report that output fell to 2.1mn b/d, with YTD production averaging 2.21mn b/d, the lowest average measurement for the country in 25 years.
The Venezuelan oil sector will experience continued production declines in 2017. Prolonged weakness in crude prices coupled with substantial outstanding debt obligations will extend the downturn into next year as national oil company (NOC) PdVSA struggles to invest in the upstream.
The award of USD3.2bn in contracts to oil field service (OFS) providers by PdVSA on September 20 will not provide a sufficient boost to upstream operations in 2017. The contracts are designed to boost output from the prized heavy oil Orinoco Belt by 250,000 b/d via 480 wells and mitigate production losses over the next 30 months. However, we believe declines from other maturing oil projects will outweigh potential gains from these agreements.
In October, PdVSA announced agreements with two of its joint partners, Repsol and Rosneft. The agreements include a USD1.2bn credit line from Repsol to increase output at the Petroquiriquire joint venture and USD20bn financing agreement with Rosneft to improve operations at its five heavy oil joint ventures and the Mariscal Sucre offshore gas project.
PdVSA advanced its modernisation of the Puerto La Cruz refinery in October. The NOC received its last delivery of bulk equipment from Wison Offshore & Marine for work related to the expansion project at the 190,000b/d facility. When completed in 2018, the refinery will have a capacity of 210,000b/d.
PdVSA will fail to begin natural gas exports to Colombia on December 1. An agreement signed on September 28 between PdVSA and Colombia's Petromil Gas involves shipments of 1.42mn cubic metres (mcm) per day sourced from Venezuela's offshore Cardon IV block . Underutilisation of hydropower facilities, a deficit of gas supplies and continued infrastructure deficiencies will prolong Venezuela's inability to realise its export ambitions into 2017.
The Venezuela Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Venezuela including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Venezuela Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Venezuelan oil and gas industry.
- Benchmark BMI's independent oil and gas industry forecasts for Venezuela to test consensus views - a key input for successful budgeting and strategic business planning in the Venezuelan oil and gas market.
- Target business opportunities and risks in the Venezuelan oil and gas sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Venezuela.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity) and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering oil and gas reserves, supply, demand and refining, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the upstream and downstream sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecast:
- Pricing: Oil price (USD/bbl, WTI, Brent, OPEC basket, Urals); oil products prices (unleaded gasoline, gasoil/diesel, jet/kerosene – USD/bbl) at global hubs.
- Production, Consumption, Capacity & Reserves: Proven oil reserves (bn barrels), production, consumption, refinery capacity and throughputs (‘000b/d); proven gas reserves (tcm), production and consumption (bcm) and fuels trade.
- Imports & Exports: Crude oil exports/imports (‘000s b/d) and value of crude oil trade in USD. Fuels exports/imports (‘000s b/d) and value of fuels trade in USD. Natural gas imports/exports (bcm), by pipeline and/or LNG, and value of natural gas trade.
BMI’s Oil & Gas Risk Reward Index
BMI’s Risk Reward Indices provide investors (independents, NOCs, IOCs, oil services companies) looking for opportunities in the region with a clear country-comparative assessment of the upstream and downstream market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A profile of the upstream and downstream sectors, including analysis of reserves, output, consumption and trade of energy products; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Comparative company analyses by USD sales, % share of total sales, number of employees, year established, ownership structure, oil production (‘000b/d), gas production (bcm), downstream capacity (‘000b/d) and % market share.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Regional perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.
Global Oil Market & Oil Products Outlook
Based on our country coverage of over 99% of global oil and gas production and consumption, BMI provides demand, supply and price forecasts to end-2024 for oil, gas and oil products.
The Oil & gas Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.