Venezuela’s troubled state oil company PDVSA is pressuring its joint venture partners to strengthen their commitment to their joint projects, Reuters reports, citing unnamed sources.
The company has insisted that its partners from Europe and the United States publicly declare whether they will continue participating in the joint ventures amid more U.S. sanctions. This participation has become uncertain as the latest round of sanctions has made it more difficult for PDVSA’s partners to transfer cash out of Venezuela and also to market the oil the joint ventures produce.
PDVSA’s partners in the Orinoco Belt, where most of its heavy crude reserves are concentrated, include Total, Equinor, Rosneft, and Chevron, as well as China’s CNPC. Earlier this year, PDVSA also struck two new production deals, one with a U.S. company and one with a French one, to help reverse a consistent and growing decline in production.
The terms of the joint ventures are changing, however. A Reuters report from earlier this month said PDVSA had begun mixing its extra heavy crude with locally produced light oil as imported diluents from the United States are now hard to come by. Normally, according to Reuters, the joint venture partners would market their production separately, but now the mixed crude was being delivered to PDVSA for exports as a way around U.S. sanctions.
The four joint ventures between PDVSA and Total, Equinor, Rosneft, and Chevron operate four heavy crude upgraders that have a total capacity of 700,000 bpd. This is more than two-thirds of Venezuela’s oil production, which is currently around 1.1 million bpd but could drop to about 900,000 bpd if no action is taken to stop the decline, a Wood Mac analyst warned recently.
The companies are very likely—and understandably--reluctant to make a commitment in such a complex situation. Total, however, has already said it could continue working in Venezuela, even though the French company evacuated its foreign workers and has complained about its bank accounts getting blocked.