Venezuela’s military eyes declining PdV oil fields

OREANDA-NEWS. October 28, 2016. The Venezuelan military is eyeing upstream business opportunities in Venezuela's debilitated oil industry, potentially sidelining state-owned PdV from some of its legacy assets.

The defense ministry's mining, oil and gas company Camimpeg, set up earlier this year, has launched a program to acquire "technical information" on oil reservoirs and associated infrastructure on the east coast of Lake Maracaibo.

Camimpeg, which has no direct oil industry experience, has partnered with a Miami-based company, Southern Procurement Services (SPS), to carry out the technical information acquisition program, an aide to defense minister general Vladimir Padrino Lopez told Argus today.

Technical experts with unnamed companies based in Russia, Germany, Colombia and Canada will assist Camimpeg and SPS in acquiring the data, the aide added.

The technical information Camimpeg and SPS are seeking is centered on mature oil-producing fields on the east coast of Lake Maracaibo that include Lagunillas, Mene Grande, Ciudad Ojeda, La Ca?ada de Urdaneta, Bachaquero and T?a Juana. The aging fields are part of PdV's western division where light and medium oil production is declining. The downturn has accelerated since the government nationalized oil services companies there in 2009. In recent months foreign oil services companies largely withdrew because of a lack of payment by PdV. Critics say the reservoirs may also be damaged because of over-pumping and mismanagement.

The decline in PdV's light and medium production of grades such as 30°API Mesa has forced PdV to import alternatives for blending with its extra-heavy Orinoco crude.

According to a 25 October company statement obtained by Argus, SPS chief executive Manuel Chinchilla said the data acquisition effort with Camimpeg "seeks to find the best technical solutions with state of the art technology to raise crude production" on Lake Maracaibo's eastern coast where PdV's oldest oil fields are located.

The energy ministry and PdV declined to comment. The type of well and reservoir data that Camimpeg and SPS are seeking is already available at PdV and the energy ministry, industry officials say.

"It appears that PdV and the energy ministry will be ordered to transfer huge amounts of historical technical to Camimpeg, SPS and foreign companies that the government is declining to identify," a PdV upstream executive in the company's Maracaibo-based western division tells Argus. "This is a troubling development at a time when PdV is under investigation in Venezuela and internationally for alleged corruption by PdV executives and foreign suppliers."