PDVSA Plans to Boost Oil Output Even as Venezuela Calls for Cuts

  • Company wants to add 50,000 barrels a day of production
  • Venezuela has been calling for OPEC cuts to raise prices

Petroleos de Venezuela SA is planning to reactivate wells in the Lake Maracaibo region to add 50,600 barrels a day of crude output next year even as its president, Oil Minister Eulogio Del Pino, says that OPEC is working with non-OPEC countries to reduce global supply.

PDVSA signed an alliance with China’s Shandong Kerui Group Holding Co. to repair and connect 624 wells that will add 22,600 barrels a day of crude and require an initial investment of $30 million, the company said Wednesday in a statement. The company also said it was in talks with a Bulgarian-Venezuelan consortium to connect 307 wells that will add 28,000 barrels a day. The $100 million cost for that project would be financed by Bulgarian investment group ALECO.

“The works associated with both projects will be completed in a year, and both companies will be working before the end of the year to start adding the new barrels in the beginning of 2017,” PDVSA said in the statement.

The announcement came a day after Del Pino said an agreement among OPEC and non-OPEC states to limit oil production could slash global supply by 1.2 million barrels a day and add as much as $15 to prices. Two weeks ago, PDVSA said it was getting ready to start what it called “one of the world’s largest drilling projects” in the Orinoco heavy crude belt to add 250,000 barrels a day of new output.

As part of that plan, PDVSA will drill 480 wells at a cost of $3.2 billion over the next 30 months. Schlumberger Ltd., Horizontal Well Drillers LLC, and Venezuela’s Y&V Group were selected after a worldwide tender, with Halliburton Co. and Baker Hughes Inc. providing support for specific project activities.

Venezuela’s production fell to 2.33 million barrels a day in August, according to the oil ministry. That was 226,000 barrels higher than OPEC’s estimate of 2.1 million, based on secondary sources. The country has lost over 250,000 barrels a day of output from levels seen last year, according to OPEC.

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