PdV report details upstream performance gap

Venezuelan national oil company PdV and its joint ventures fell further behind official crude production targets in the first five days of September, with marked declines in the Orinoco heavy oil belt, according to an internal upstream report obtained by Argus.

The production data in the sensitive daily reports, which PdV issues internally, is widely seen as systematically inflated, in part because upstream managers are wary of the potential consequences of relaying negative information to Caracas, PdV officials say.

But even discounting deliberate data manipulation, technical or methodological flaws, and the inclusion of condensates, the reports offer a rare glimpse into official field and divisional-level trends across Venezuela.

According to the 5 September report, PdV and its joint ventures produced an average of 1.5mn b/d of crude in the first five days of the month, a figure that exceeds the estimate of Argus and other secondary sources for August production by up to 300,000 b/d.

The report indicates that the early September accumulated output missed a target of 1.768mn b/d by 268,000 b/d, more than half of which came from the Orinoco oil belt. In PdV's 31 July report obtained by Argus last month, July production was recorded as 1.527mn b/d, missing a 1.652mn b/d target by 125,000 b/d. The figures from the two reports show that official production for PdV and its joint ventures is falling, while the official targets are going up.

The gap is even wider when considering the official figure of 1.469mn b/d for July that Venezuela communicated to Opec in its latest oil market report, and the secondary source July average of 1.278mn b/d.

The ambitious targets, which are noted for each main oil field and PdV's Orinoco, eastern and western divisions and its tiny offshore and gas units, are consistent with the government's late 2017 pledge to raise production by 1mn b/d within one year.

The widening gap is reflected in selected field and divisional data. The Orinoco division, long considered the driver of future growth, produced 856,700 b/d in the first five days of September, up 1.6pc from July, according to the data in the two reports. The Orinoco output is far below official 2015 production of 1.3mn b/d.

The breakdown by Orinoco production in the 5 September report shows wide output-target gaps in PdV´s mature San Tomé and Morichal operations and PdV´s PetroCedeño joint venture with minority partners Total and Equinor. The same projects are the top three underperformers in the July report. PetroCedeño showed early September output of just 64,500 b/d, well short of its upstream capacity of 200,000 b/d. The July data showed PetroCedeño at 71,600 b/d. The data aligns with Argus reporting on staggered shutdowns of PdV´s four heavy crude upgraders at Jose.

In contrast, PdV´s PetroPiar joint venture with Chevron and its PetroMonagas joint venture with Russia´s state-controlled Rosneft were each running above 125,000 b/d, close to their July levels, according to the PdV reports. But while PetroMonagas is operating around capacity, PetroPiar is short of its 190,000 b/d potential.

PdV´s historic eastern and western divisions were each edging closer to 300,000 b/d apiece in early September, around half of the 2015 official levels. The western division, centered around Lake Maracaibo, had already slipped to 298,000 b/d on 5 September — although it averaged 306,400 b/d for the first five days of the month.

The report also details a broad range of day-to-day operational problems, such as a lack of materials, equipment and storage, power outages, well leaks and theft of electrical cables.