S&P expects Venezuela oil output to jump in 2013

Credit rating agency Standard & Poors released its annual review of Venezuela state oil company PDVSA. Mostly it’s pretty uncontroversial. But they are remarkably optimistic about Venezuelan oil production in 2013.

During 2011, PDVSA’s crude oil production averaged 2.991 mbpd, up 1% from 2.975 mbpd in 2010… The company’s financial performance and main credit metrics were strong in 2011 with an EBITDA margin of 40%, mainly due to higher oil prices… Assuming our price deck for oil and gas at $80 for 2013, and production levels of about 3.4 mbpd, we believe that these ratios should remain within the current range.

So to get this straight, S&P is saying that PDVSA oil production will be 14% higher in 2013 than in 2011. That is an achievable goal, but an ambitious one.

It’s also a goal that would shatter Venezuela’s commitment to OPEC quotas, unless global consumption grows enough that they decide to raise quotas. Here’s PDV’s latest on OPEC, from June 12:

Venezuela will make a very strong call to the countries that have excess production to comply with the ceiling that was agreed at the last OPEC meeting held in December 2011… The Venezuelan representative to the OPEC conference expressed Venezuela’s concern because there is an overproduction of nearly 3 million barrels per day. OPEC members “are producing about 32.9 million barrels per day; we have to cut it. We must go back to the 30 million ceiling,” he pointed out. “We see no demand for that (excess) crude. On the contrary, we have estimated that the demand growth will be lower than in 2011. The economic situation has deteriorated.”