IOCs, contractors urge PdV to pay debts

Foreign oil companies and local contractors are urging the Venezuelan government and state-owned PdV to pay debts and reform oil legislation to give the private sector control over joint ventures.

A letter addressed to National Assembly oil and energy commission head Angel Rodriguez by the foreign oil companies association (AVHI), the oil services chamber (CPV) and gas processors chamber (AVPG) calls for "a permanent dialogue" between the oil ministry, PdV, the legislature and the industry chambers to address contract compliance with "existing joint ventures and natural gas licenses; timely payment of financial, commercial and dividend debts; and the optimization of autonomous operational, financial, labor, security and environmental management of the joint ventures."

The letter signed by AVHI president Luis Xavier Grisanti, CPV president Reinaldo Quintero and AVPG president Miguel Rivero coincides with a government-led effort to reform Venezuela's oil law to pave the way for execution of new services contracts.

Among AVHI's members are US major Chevron; China's state-owned CNPC; Russia's state-controlled Rosneft; European firms Eni, Shell, Total, Equinor, Galp and Perenco; India's ONGC Videsh; and Argentina's Pluspetrol.

"The current situation is critical because of the drop in production and financial and operational disinvestment caused by internal and external factors such as, for example, US sanctions," the letter says.

PdV finance and oil ministry officials tell Argus that PdV's accumulated debt and dividend arrears with foreign oil companies and contractors totals up to $25bn.

In recent years, the company has paid some of this debt with crude and products exports mainly benefitting some of its foreign partners.

Foreign joint venture shareholders will not commit to significant new investments until an effective mechanism is in place to accelerate payment of legacy debts, and the oil and gas laws are amended to improve terms and conditions to allow foreign companies to acquire majority stakes in upstream projects, guarantee operational autonomy of the joint ventures and services contracts, and allow partners to independently market their share of offtake, the officials added.

Institutional communications between the Maduro government and the country's private oil and gas sectors including PdV's foreign joint venture partners have been sporadic at best since 2017 as PdV's crude production decline accelerated and its local refineries mostly shut down.

Currently Venezuela produces about 500,000 b/d of crude and its operational refining capacity is about 230,000 b/d out of 1.3mn b/d of installed capacity.