PDVSA Restarts Drilling Operations in Orinoco Oil Belt

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Researched by IIR News (Sugar Land, Texas)--Venezuela's state-owned energy company Petroleos de Venezuela (PDVSA) has restarted drilling operations at its Petromonagas joint venture, ending three years of halted activity.

PDVSA said it resumed drilling at Petromonagas after the activation of drill PDVEN-778, located in the Orinoco oil belt. According to a report from PDVSA, the drill has been active since December, and "it is the first to start activity in Venezuela, after three years of paralyzed drilling."

Venezuela's active drilling rig count reached zero in October 2020, compared with 70 to 90 in 2013, according to Baker Hughes Company (NASDAQ:BKR) (Houston, Texas).

The Orinoco oil belt is in Venezuela's eastern region and is home to the nation's largest oil reserves. According to PDVSA, about 60% of Venezuela's oil production comes from this area and is piped to the Jose terminal on the Caribbean coast, to be exported to international oil markets.

Petromonagas is a joint venture between PDVSA and Roszarubezhneft, a Russian company that bought Rosneft's shares in Venezuela following the possibility of U.S. sanctions on the Russian oil major in 2020.

Venezuela's oil production has been declining for more than a decade, due to a lack of investments and aging infrastructure. However, oil sanctions imposed by the U.S. in January 2019 spurred another sudden drop in the nation's output. In the late 1990s, Venezuela's oil production was more than 3 million barrels per day (BBL/d), compared to 2.3 million and 2.4 million BBL/d by 2010.

According to the EIA's data, after 2015, the country experienced lower oil outputs, dropping from 2.4 million BBL/d to 1.2 million BBL/d in December 2018, one month before the U.S.-imposed sanctions. In December 2022, the nation's oil output reached 670,000 BBL/d.

Nevertheless, the reactivation of the drill at Petromonagas coincides with the flexibility of oil sanctions on Venezuela and the nation's efforts to increase oil and gas production. In November last year, the U.S. eased sanctions on Venezuela, allowing Chevron Corporation (NYSE:CVX) (San Ramon, California) to return to normal operations and export oil to the U.S. Since then, the U.S. company has been reigniting its operations at its joint ventures with PDVSA.

During the quarterly call in January, Chevron's CEO, Mike Wirth, said about the company's operations in Venezuela: "We have seen some positive production response already in the entities that we're involved in. They're producing about 90,000 barrels a day now, which is up about 40,000 barrels a day since we saw the change in these license terms. That's been a good short-term effect."

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