(Repeats to add graphic)
By Alexandra Ulmer and Brian Ellsworth
CARACAS Jan 13 Venezuelan state energy company
PDVSA projects oil production will remain near 23-year lows in
2017, an internal document shows, suggesting more hardship ahead
for the crisis-wrought OPEC member country.
Cash-squeezed PDVSA, which accounts for nearly all of
Venezuela's export revenues and is the socialist government's
financial motor, saw production tumble by nearly 10 percent in
2016 due to an unraveling economy and low oil prices.
The company's weak finances are causing operational
disruptions, and are both affected by and contributing to
Venezuela's economic downturn. Three years of recession and
soaring prices have pummeled Venezuelans, with many skipping
meals and lootings of supermarkets commonplace. Some economists
have estimated that gross domestic product contracted by 10
percent or more in 2016.
This year, PDVSA sees production at 2.501 million barrels
per day (bpd), an increase of just 5,000 from the 2.496 million
bpd for the first 11 months of 2016, according to a nine-year
strategic plan presented in December.
That is broadly on par with output levels in 1993, as the
struggle to pay providers has led some services companies to
halt work and oil suppliers to delay or halt deliveries of fuel
The 261-page document seen by Reuters gives a rare window
into PDVSA, a highly secretive company that seldom publishes
detailed business plans. It shows PDVSA expects a shortfall in
imported diluents needed for blending with its extra heavy crude
output, along with aggressive refinery maintenance plans.
PDVSA did not respond to an email seeking comment on the
Crude shipments to political ally China, which has lent
Venezuela more than $50 billion through a decade-long
oil-for-loans program, are slated to increase 55 percent in 2017
from 2016 to reach 550,000 bpd, according to the presentation.
There was no explanation for the jump, but it could signal
the end of a grace period that Caracas negotiated with Beijing,
which had allowed it to cut shipments in 2016 to 355,000 bpd
from 627,000 a year earlier.
Oil shipments to India, however, are expected to fall 15.5
percent to 360,000 bpd. Unlike China, India pays mostly in cash,
so a reduction in exports would likely worsen Venezuela's
LOW IMPORTS, LONG MAINTENANCES
PDVSA also projects a sizeable deficit of light crude and
naphtha, both of which are crucial to turn the extra heavy oil
it produces in the Orinoco Belt - one of the world's largest
deposits - into lighter grades for exports.
Venezuela started regular imports of diluents in 2015
because its output of light and medium grades has tumbled, but
PDVSA's cash shortage has led to delays and insufficient
purchases. Long lines of tankers waiting to discharge routinely
form at its ports, according to Thomson Reuters data and
PDVSA in 2017 plans to import 125,000 bpd of light crude but
will still face a deficit of 217,000 bpd, according to the
document. It will also face a shortage of 28,000 bpd of naphtha,
a fuel similar to gasoline used to dilute Orinoco oil in order
to increase its sale value.
PDVSA would partially offset its diluent deficit in the
medium term with maintenance at domestic refineries so they can
produce more naphtha. It also plans to restart a refinery in the
Caribbean island of Aruba now operated by U.S. unit Citgo
But the company's projects are often delayed, the Aruba
refinery is unlikely to be up and running soon, and refineries
at home are plagued with frequent outages and blackouts.
The 2017 refinery maintenance schedule described in the
document shows PDVSA plans to shut down some crucial domestic
units for 90 days - roughly twice the industry standard length
for major maintenance.
This suggests that PDVSA is seeking to take advantage of a
stagnant production to overhaul its refining network. Refineries
in Venezuela and nearby Curacao in 2016 received 200,000 bpd
less in crude deliveries than the year before, the document
(Additional reporting by Marianna Parraga in Houston; Editing
by Andrew Cawthorne and Leslie Adler)