Venezuela: a key player energy equilibrium · PDF fileenergy equilibrium and security ... • Instability in the Middle East and Africa ... Venezuela’s Crude Oil Production

Embassy of the Bolivarian Republic of Venezuela
Venezuela: a key player Venezuela: a key player for the hemisphere for the hemisphere energy equilibrium and energy equilibrium and securitysecurity
Embassy of the BolivarianEmbassy of the BolivarianRepublic of VenezuelaRepublic of Venezuela

Market fundamentalsMarket fundamentals
Venezuela strategic position in energyVenezuela strategic position in energy
Venezuela Venezuela U.S. bilateral energy U.S. bilateral energy
relationshiprelationship
Energy security in the western Energy security in the western
Hemisphere Hemisphere
Guidelines

Current Market Fundamentals
Slow recovery of Iraq and few hope for the short term The Iran and North Korea crisis Instability in the Middle East and Africa Speculation of the Financial Market Oil addiction in developed countries - no sign for changes in consumption
patterns
End of cheap oil no new discovery of mayor reservoirs Production decline and lack of spare capacity Very tight refining capacity New unforeseeable demand in Asia supply lock-in by China High taxes in consuming countries, specially in Europe Lack of investment Majors are investing less than 10% of the investment
needed to meet oil demand
Political ElementsPolitical Elements
Technical ElementsTechnical Elements
The world is unsustainable under the current consumption pattern of the developed world and
under the current geopolitics of oil

Venezuela Position Venezuela Position on Energyon Energy

Oil World Reserves
Source: Oil & Gas Journal, December 2005
Venezuela, including the Orinoco Belt, is the country with the worlds largest liquid hydrocarbon reserves (316 billion bbl)
Latin America (excluding Venezuela) 2%
Middle East & Iran49%
Venezuela21%
Canada 13%
Africa 7%Europa 7%
Asia Pacific 2%
Total World Reserves 1,527 Billion Barrels
80
236
316
Proved
Orinoco Belt (in process of certification)
Venezuelammmbbl

Natural Gas Reserves
Source: Oil & Gas Journal, December, 2005
Venezuela 35049%
North America 24934%Latin America
116 17%
Western Hemisphere Reserves715 Trillion Cubic Feet (TCF)
Venezuela has the potential to become the 4th largest country in gas reserves and the 1st country
in gas reserves in the western hemisphere
39%
Qatar 91114%
Iran 971 15%
Russia 1680 27% Asia Pacific
West EuropeNorth AmericaAfricaRest of Middle EastLatin America
World Gas Reserves6,312 Trillion Cubit Feet (TCF)
Venezuela6%
151 - 26.1 - Proved 152 - 34.3 - Estimated (Offshore)350 - 60.4
TCF mmmboe
Venezuela

Venezuelas Total Hydrocarbon Production
Source: 2000-2004 PDVSAs 20-F, 2005 Est.
0.0
1.0
2.0
3.0
4.0
5.0
2000 2001 2002 2003 2004 2005
Natural Gas
LPG & Condensates
Light
Medium
Heavy & XH(include 3rd party)
Third Party Crudes
MMBPDOE
4.1 4.23.8
3.64.0 4.1
16%
5%
19%
24%
25%
11%
Note: 1 barrel of Oil Equivalent (OE) = 5,800 cubic feet of natural gas
Venezuelas production, including natural gas, exceeds 4 million bpd oil equivalent

PDVSAs 2005 Crude's and Products Flow (mbd)
Refined Product
Sales
Crude Sales
Crude & LPG
Production
Refined Product
Purchases (Wholesale)
Crude Spot Purchases
Refineries Abroad
Crude Exports
Local Refineries
Local Market
PDVSAs Supply Disposition(does not include Faja third party)
Product Exports
Consolidated Sales
506
650
1,831
1,204
2,628
1,156
1,472
627
International Activity

Embassy of the Bolivarian Republic of Venezuela PDVSA FINANCIAL STATEMENTPDVSA FINANCIAL STATEMENT
Income Statement (US $ million)Income Statement (US $ million)
Source: PDVSA Audited (IFRS)
Audited Audited
2003 2004 2005
International Sales 44,178 60,972 81,105
Venezuela Sales 961 1,227 1,408
Other Income 1,450 2,558 3,217
Total Income 46,589 64,757 85,730
Crude & Product Purchases 21,016 24,649 32,979
Exploration & Production Expenses 9,400 13,492 14,763
Depreciation & Amortization 3,042 3,082 3,334
Royalties 6,428 9,247 13,318
Interest Expenses 684 456 190
Other Expenses, Net 1,175 1,764 1,937
Total Costs and Expenses 41,745 52,690 66,521
Earnings before Taxes 4,844 12,067 19,209
Social Development Expenses 249 1,242 6,909
Income Taxes 1,318 5,419 5,817
Net Income 3,277 5,406 6,483

Venezuelas Crude Oil Production
Source: 2000-2005 PODE, 2006-2012 PDVSA
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12
Risk Sharing Exploration
New JV & Projects
Own Operations
Existing Joint Ventures
Operating Joint Partnerships
3.2 3.3 3.02.8
3.13.3 3.4
3.84.1
4.64.9
5.55.8
MMBPD

CAPEX: 75.735CAPEX: 75.735 OPEX: 48.224OPEX: 48.224
55.928
19.807
39.781
8.443
PDVSA 3rd Parties
Total: 123.959
Business Plan 2006-2012 (billion US$)

Production Schemes
PDVSA
Pro
duct
ion
Sch
emes
Unconventional oil & gas drilling (fracture stimulationand horizontal drilling).
Secondary recoveryWater & gas injection
Slant drilling/horizontalDrilling, commingle wells
Private participant involvedOn offshore drilling and production by special rigs (jackups, drill ships, semi submersible)
Traditional Areas
Onshore
PDVSA60 80%
Private Participation (operates)20 40%
Offshore
Third PartiesOperate100%
Own Operations Operating Joint Partnership Private
PDVSA51%
Private Participation (operates)
49%
Traditional Areas Orinoco Belt
Key Drivers:

Remaining Estimated Reserves 1,04477%
To Be Quantified 236
17%
Proved 392.9%
Proved Developed 4.00.3%
1,360 Billion Barrels Estimated
MACHETE
R o O r i n o
c oBOYACA JUNIN
CARABOBO
AYACUCHO
Total Area Orinoco Belt 55,314 Km2
Orinoco Belt
Only 0.3% of the Orinoco Belt has been developed
E&P: Quantification of Reserves

Certification of Crude Oil Reserves by Independent Parties

0,00
22,00
50,00
70,00
100,00
120,00
140,00
240,00
Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Aug-08 Nov-08 Dec-08
RESERVES INCORPORATION TIMELINE (BBLS)
7,6
20,2020,40
25,09
49,20
56,60
90,80
108,20
120,50
146,60
191,60
235,60
9,11,5
Certification of Orinoco Magna Reserves

0
200
400
600
800
1000
1200
1400
2005 2006 2007 2008 2009 2010 2011 2012
Initial Production
New Development I
New Development II
Optimization637687
807
1,207
MBPD
1,138
Orinoco Belt Production Profile
Norway
France
SINCOR PETROZUATA
USA
HAMACA
USAUK
CERRO NEGRO
Current Production Strategic Associations

Canadian Tar Sands vs. Venezuelan FAJA
Production Process: Surface Mining
Estimated Production Cost
US$ 25 / Barrel*+
Upgrading cost
Estimated Recoverable Reserves
170 Bbls
*Source: Wall Street Journal: As Prices Surge, Oil Giants Turn Sludge Into Gold 03.27.2006
Production Process: Oil Drilling
Estimated Production CostProduction:
< US$ 1 / Barrel
Estimated Recoverable Reserves
236 Bbls
Upgrading:US$ 4 / Barrel
Description: Through a complex state of the art mining and production process, this bituminous sand is
transformed into Heavy Petroleum
Description: 9API Crude oil produced under available technology, that is
upgraded into 32API Crude
ROI=10% @ $40/barrelROI=10% @ $40/barrel ROI>200% @ $40/barrelROI>200% @ $40/barrel

Refining

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Venezuela: a key player energy equilibrium · PDF fileenergy equilibrium and security ... • Instability in the Middle East and Africa ... Venezuela’s Crude Oil Production