Bloomberg News

TNK-BP Said to Seek $200 Million From PDVSA at Venezuela Venture

April 19, 2012

TNK-BP, BP Plc (BP/)’s Russian venture with a group of billionaires, estimates it’s owed more than $200 million by Petroleos de Venezuela SA for crude sales from their heavy oil venture, said two people with knowledge of the matter.

The Petromonagas venture boosted output by 10,000 barrels a day this year, exceeding the capacity of its upgrading plant, which turns the sticky fuel into lighter crude. PDVSA, as the Caracas-based state company is known, has been processing and selling the additional amounts, without reimbursing its Russian partner, the people said, asking not to be identified because the matter is confidential.

Venezuela, holder of the world’s second-biggest oil reserves after Saudi Arabia, aims to raise output from the heavy oil-dominated Orinoco belt by 500,000 barrels of oil a day this year with the help of foreign partners. The dispute is a setback for one of TNK-BP’s first ventures outside Russia. The Moscow- based company agreed to buy a 16.7 percent in Petromonagas and other assets from BP in 2010 as the U.K. company raised money after the Gulf of Mexico oil spill.

A PDVSA official, who asked not to be identified because of company policy, said the information is false, without giving any details. Dmitry Sergeev, a TNK-BP spokesman, declined to comment on the matter.

Petromonagas plans further output increases this year. The joint venture will produce 145,000 barrels a day by the end of this year, PDVSA Vice President for Exploration and Production Eulogio del Pino said on Feb. 29. The venture pumped 120,000 barrels a day, he said at that time, 10,000 barrels a day more than in December, according to the TNK-BP website.

Chavez Debts

President Hugo Chavez has relied on PDVSA to finance his social programs since taking power in 1999, reducing cash for the oil company to invest in increasing production. PDVSA’s total debt surged 40 percent to $34.9 billion last year after selling more than $10 billion in bonds, while debt owed to service suppliers rose to $12.4 billion, the company said on April 17 in a presentation on its 2011 results.

The company, which reported that net income surged 42.4 percent last year to $4.5 billion as the average price for the country’s crude-oil exports rose to a record high, will continue to take on new debt as it looks to develop heavy crude oil fields in the Orinoco belt with its minority partners, Oil Minister Rafael Ramirez said on April 17.

To contact the reporters on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net; Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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