PDVSA reshuffle boosts chances of oil output increase

9/4/2014

PDVSA reshuffle boosts chances of oil output increase

PIETRO D. PITTS

CARACAS, Venezuela (Bloomberg) -- President Nicolas Maduro’s decision to remove his main economic and energy policy maker improves Venezuela’s chances of tapping more of the world’s largest crude reserves, according to Barclays Plc.

While Rafael Ramirez’s exit from the posts of vice president for economy and oil minister dashes hopes for economic reform, it may give his successor at Petroleos de Venezuela SA the opportunity to focus more on the job of pumping oil, Barclays analysts wrote in a note to clients on Sep. 3. Besides running PDVSA, Ramirez oversaw the exchange system and housing programs among other non-oil duties.

His deputy on the PDVSA board, Eulogio Del Pino, will take over as part of a series of government changes unveiled by Maduro on Sept. 2. With a master’s degree in exploration from Stanford University, Del Pino oversaw the company’s operations and coordinated agreements with international oil firms as head of Corporacion Venezolana del Petroleo, or CVP.

“The appointment of Del Pino to PDVSA is marginally positive,” Barclays analysts Alejandro Arreaza, Alejandro Grisanti and Donato Guarino wrote. “This increases the chances of increasing production.”

Active army general Rodolfo Marco Torres replaced Ramirez as the economy vice president, with Asdrubal Chavez, the cousin of the late leader Hugo, named oil minister.

Chavez’s appointment is neutral, according to Barclays. “We doubt Chavez could hinder any plan Del Pino might have.”

Even so, PDVSA’s capacity to invest may be constrained by Del Pino’s lower political clout than Ramirez, they wrote.

Venezuela’s oil production peaked under Ramirez’s tenure as president of PDVSA in 2006 at 2.91 MMbpd, never approaching his goal of a 5.8 million by 2012.

PDVSA, based in Caracas, plans to invest $302 billion through 2019 in partnership with local and international oil companies to boost output to 6 MMbpd from about 2.9 million in 2013, according to its annual report. The company also aims to increase gas and condensate output, build six new oil upgraders and increase domestic refining capacity.

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