In the next 30 years oil will continue to be an important source of energy in Venezuela and even more so gas, because there are sufficient reserves of both fuels and it is estimated that the recovery of the Venezuelan oil and gas industry would take place in a period of time of no more than 8 years from the moment of political change in the country.
This was stated by the Advisory Engineer in the Energy Area of the Country Plan, Juan Szabo, an oil expert who participated as a speaker at the forum “Recovery plan for the hydrocarbon industry, a continuous process.” Organized by the Delegate Commission of the National Assembly, with the participation of deputies Elías Matta and Luis Stefanelli as moderators of the event.
In his extensive presentation, Szabo is optimistic and his experience in the field confirms it, that the Hydrocarbon Industry is recoverable and also profitable, because it has large reserves of crude oil and gas, fields in all kinds of stages of maturity even though production by well is declining under currently used technologies.
“It is a fact that heavy crude oil production and upgrading is a technically and commercially successful combination due to its ability to produce synthetic crudes at very competitive prices. As for gas, it is mostly associated gas production and there is an underutilization, the country is not gasified and gas is not given all the uses that should be given in a developing state.”
He added that despite so many years of oil activity, it still has exploration potential in both the East and the West areas and has the infrastructure to handle the production of four million barrels a day. However, he acknowledged that even though the national refining system is significant, its utilization is very low due to lack of investment and maintenance.
“The shortage of trained personnel in all activities in the industry and the current legal and fiscal framework discourages investment and therefore does not allow a recovery plan to be made, so it is necessary to change it.”
He considers that, if a functioning and reactivated oil industry is wanted to be able to start the recovery process of economic growth and its diversification for the benefit of all Venezuelans, it is necessary to restore the confidence of international markets and within the country. It (the industry) must be there to supply fuel and raw materials in a safe and reliable way.
“We have to show an oil industry that can guarantee and back up the debt restructuring and prepare the country to adapt to the new environmental protection schemes.
To conclude, engineer Szabo affirmed that there is the potential to increase production to 2.7 or 3.1 million barrels per day (MMBPD) depending on the price scenario in 8 years, or from the beginning of the recovery plan. “The energy transition is not an obstacle for the rebirth of the hydrocarbon industry in Venezuela.”
The specialist maintains the that the new post-COVID realities and growing decarbonization represent opportunities for Venezuelan development and remain current in the international market.
He warned that the complex internal political situation and the changing international geopolitics, underline uncertainties to the implementation of the activities and the possible scenarios show a significant dispersion regarding the economic results of the plan.
“That is why it is so important to achieve political consensus, not only behind the laws and fiscal changes, but behind the plan. It depends on so many of us, the oil men, the politicians and the whole country, if there is to be light at the end of the tunnel,” concluded the engineer Szabo.
The squandering of 21st century socialism
Deputy Elías Matta, before presenting Engineer Szabo, made an recount of the current situation of the country’s oil industry that has been destroyed during the last 20 years by the Chávez-Maduro regime and recalled that the republic received income from the oil rent between 1999 and 2019 of 984 thousand 913 million dollars (984 billion), if the income through 2020 and 2021 are added, it exceeds one million million dollars (one trillion) and yet the country is in ruins.
“The BCV received only 474 thousand 903 million dollars (474 billion), that is, 48.5 percent and PDVSA’s received the rest for its operating expenses and for the set of activities that it began to carry out, because it became a mega company that made homes, hospitals, it did it all, it handled 510 thousand 010 million dollars, that is to say, 51.5% of the income in dollars was handled directly by PDVSA. Under Socialism of the 21st century, the black box was owned by PDVSA.”
The Organic Law of Hydrocarbons (LOH) aims to maximize the production of hydrocarbons
For his part, Deputy Luis Stefanelli, spoke in general terms of the new Organic Hydrocarbon Law (LOH) that aims to maximize the production of hydrocarbons, downstream industrialization, and an efficient distribution of liquid and gaseous fuels, so that there is in the country an adequate supply and distribution without disbursement of public funds.
He said that a new model is required for the development of the today collapsed oil industry, without resources, without investment, with a weakened company system, among other aspects, so it is urgent to adapt, modernize and redefine a new fiscal framework.
“The National Oil Industry is the lever for economic growth in the short and medium term in Venezuela. If we did not have this lever, we would predict a Venezuela in poverty for decades before we are able to reach again the levels that we have had in previous years.”