Monthly Archives: March 2014

How is PDVSA doing with its investment plans?

In August 2010, PDVSA, Venezuela’s state oil company, published this annual report. On page 43 of the PDF, you can see the company’s investment plan. It was supposed to spend $58 billion on capital expenditures in 2013 in order to bring the Orinoco Belt into massive production.

It was one in a series of investment plans that made realistic projections for the year in process and absurd plans for massive spending two or three years out. According to the company’s annual reports, investment spending has gone up over the years. But it’s never accelerated as planned. Even the memory of the plans is now concealed: the report I have posted here is no longer linked up on the PDVSA website.

Yours for no extra charge, here’s a chart of the company’s investment plans over the years (in red tones) and real spending (the thick blue line). The left scale indicates billions of US dollars. The red lines show how much PDVSA planned to spend in each future year — back in 2006 and 2007, the idea was to creep along and magically get to 5.8 million barrels a day without much investment, then in 2008 projections rose to reflect rising oilfield service prices. In 2009, the plan suddenly recognized that the Orinoco Belt wasn’t going to develop itself, and would need tens of billions of dollars a year of investment. But 2010 came. Venezuela saw most international oil companies boycott the big Carabobo bid round in 2009, and both Statoil and Total declined to turn in proposals when they were invited to develop a new field. PDVSA’s cost of financing surged. Where would $50 billion a year come from? The latest plans show a bit more contact with reality, indicating a more or less gradual increase in investment until 2018.

The unfortunate part of this is that the peak spending year has been steadily pushed back in every plan. So Venezuela’s oil output keeps stagnating, and the country isn’t able to monetize its greatest natural patrimony. The good part of all of this is that every year Venezuela delays developing the Orinoco Belt, a lot of very dirty fuel remains in the ground. Long term, those of us who recognize climate change as important will be thankful for Bolivarian incompetence.

PDVSA Investment plans vs spending 2007-12

PDVSA Investment plans vs spending 2007-12

Sources: PDVSA Annual reports 2007-12

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Chile going renewable

This is what we like to see. Here is January’s power mix in Chile, with year-over-year change in the right-hand column:

Chile SIC generation mix change 2013-14

The power generation mix in Chile’s main electrical grid, the SIC, has changed a bit over the past year: Solar generation up 22-fold, wind generation up 3.5-fold, hydro generation up 10%, and thermal — meaning fossil fuels — down 6%. Source here.

Add to that what happened in February. Note that solar power quadrupled month-over-month.

February power mix in Chile

According to Business News Americas, the upshot is that February’s solar energy output in the SIC grid increased more than 100-fold over a year earlier. 

Much more solar and wind power has been approved for construction in the country, so next year the GWh from solar should be even higher.