Venezuelan state oil company Petroleos Venezuela SA has whacked its 5 year capital spending plan by $6 billion to about $20 billion in response to weaker than expected oil prices and high taxes.
Pdvsa now is focusing most capital spending on core exploration, production, and refining operations and has stretched out or shelved a variety of projects it expects to finance from cash flow. At the same time, Pdvsa hopes to attract new foreign investment in oil, petrochemical, and coal projects to a far greater degree than it envisioned a year ago.
As of mid-1991, Pdvsa planned $34 billion in outlays for 1991-96, excluding more than $14 billion in expected investments from current and future joint venture partners. Pdvsa capital outlays totaled $3.7 billion in 1991 and are projected at $4 billion in 1992.
Earlier this year, Pdvsa cut its operating and capital budgets each by more than 10%.
Pdvsa's board also told noncore subsidiaries, such as petrochemical units, they will not receive funds for capital spending this year and must instead resort to their own cash flow or seek foreign investment.
With its debt at a record high, Pdvsa still must borrow more funds on international capital markets to meet capital needs in 1993-94.
Pdvsa warned that if its tax burden-more than 80% of operating profits-is not reduced the next few years, the company will continue to show a negative cash flow and won't be able to fund capital investments. The 1993-98 capital program breaks out as $13 billion to maintain oil productive capacity, $3.6 billion to upgrade domestic refineries, $1.5 billion for exploration, $1.4 billion to add oil productive capacity, $252 million for domestic marketing, and $182 million for support and other operations.
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