Energy policies are in flux in Venezuela, Colombia, and Brazil.
In each case the goal is to attract foreign investment.
Petroleos de Venezuela (Pdvsa) was revising its proposal for exploration joint ventures with foreign companies in 10 areas (OGJ, Apr. 17, p. 24).
A congressional commission was concerned that Venezuela would not have enough control over the joint ventures and would not receive enough of the profits.
It proposed changes in model contracts, and those changes are being written into the enabling legislation.
If Venezuela's congress approves the joint venture bill this month or next, Pdvsa will waste no time in sending a delegation to the U.S. and U.K. to promote foreign interest.
PDVSA'S PROBLEMS
Pdvsa also faces problems at home. Venezuela's finance ministry wants to cut Pdvsa's capital investment program to reduce the government's budget deficit.
The oil company has objected, arguing that reducing capital spending will lower potential income from existing fields-where production is dropping about 25%/year-and from fields it expects to find alone or with foreign partners.
Pdvsa plans capital spending of about 550 billion through 2004, with part coming from its cash flow and part from foreign investors.
It is heavily taxed now, with pretax earnings of $5.9 billion and after tax profits of $2 billion.
However, the government's desperation to find revenues apparently does not extend to increasing gasoline prices.
Although the 1995 budget and an economic recovery plan called for a gasoline price hike this year, the finance ministry recently promised that will not happen.
In 1993, Pdvsa lost $424 million on domestic gasoline and natural gas sales, mostly gasoline. Currently, 95 octane gasoline sells for a little more than 34/1., well below the cost of processing and distribution.
It seems the finance ministry remembers that in 1989, the last time gasoline prices were raised significantly, riots erupted and about 300 persons were killed.
OTHER ACTION
In Colombia, the oil ministry plans to ask congress to phase out the $1.10/bbl "war tax" on crude production by 2000 in an effort to attract more foreign investment to exploration.
Brazil took a more drastic step, when the chamber of deputies recently voted to end the state's oil monopoly. The senate is expected to concur (OGJ, June 19, p. 30).
Backers of an end to the monopoly say Petrobras can afford to spend only $2 billion of the $4-7 billion/year the country needs for oil projects.
Meanwhile, reports continue to circulate in Caracas that Venezuela and Brazil might merge Pdvsa and Petrobras.
But because both countries are basically pursuing the same goal - hefty foreign investments - those reports are considered to be politicians' wishful thinking.
