Venezuelan Energy and Mines Minister Ali Rodriguez has pledged that the new government of President Hugo Chávez will continue the country's policy of opening the oil industry to foreign investment, called La Apertura.
"Of course, we will honor all commitments made by the Republic of Venezuela," said Rodriguez. "Nevertheless, we need to address and resolve, once and for all, the legal and fiscal inconsistencies with which the Apertura was conceived and approved."
He explained, "The economic and fiscal aspects of the Apertura process have resulted in diminished state participation in oil revenues. State income decreased significantly because, among other irregularities, existing tax conditions were modified in the contractual clauses of Apertura agreements. Changes of this nature are forbidden by our constitution and our tax laws."
Rodriguez said, as a result, the Chávez government will introduce a legal reform law to unify rules and regulations now contained in a multiplicity of laws, allowing varying interpretations.
"We seek to clearly define the rules of the game, a request we have often received from foreign investments."
Rodriguez said, "We are also trying to reverse another institution that is both unjust and runs against Venezuelan interests. The Apertura, as it is presently structured, not only minimizes state participation in oil revenues, it also obstructs Venezuelan private-sector participation in oil and gas operations."
He denied allegations that Venezuela wants to back out marginal U.S. production (OGJ, Mar. 1, 1999, p. 34).
"According to some rumors, Venezuela is developing a policy to displace U.S. oil production. This is absurd and untrue. We are the first affected by the fall in the oil prices due to worldwide overproduction. It is obvious that we have a community of interests with U.S. producers in defending oil prices."
New policy
Rodriguez outlined several key points in his government's policy to build a strong public and private energy sector. It will focus on the export of finished petroleum products, which will require additional foreign investment in Venezuela.The government plans "to increase the use of our refinery products. This is an attractive business if we take into consideration that Venezuela has six refineries with aellipse(combined) capacity of 1.3 million b/d. On top of this we own refineriesellipsein the U.S. and Europe with an additional capacity of 1.6 million b/d. These levels will be increased even more."
He said the government plans to develop more gas reserves. Proven reserves are about 141 tcf, of which 91% is associated; and potential reserves are 80 tcf.
"We have already asked our national Congress to authorize the Ministry of Energy and Mines to issue a law regulating the (gas) exploration and production activities, as well as the industrialization, transmission, distribution, and marketing activities, in order to develop our gas reserves. This will open opportunities for investment that we estimate at $3.7 billion.
"These funds are needed to build around 1,200 km of gas pipelines...."
Rodriguez said Venezuela plans to double its 8.4 million metric tons/year of petrochemical production capacity, utilizing some of the added gas.
"We consider some of the best opportunities can be found in plastics and olefins." He said fertilizer capacity also may be boosted.
He said Venezuela will also press production of its Orimulsion fuel-a mixture of bitumen, water, and surfactant-and its production of high-quality coal.
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