VENEZUELA - Part 3 - Exports & Logistics.

Venezuelan exports of oil and gas liquids (NGLs) in 1999 are expected to average about 2.96m b/d, compared to 3.116m b/d in 1998 and 3.052m b/d in 1997. These exclude Orimulsion, a burner fuel regarded as liquid coal. If OPEC's price defence strategy and production cuts are to be extended for another year to end-March 2001 and if Venezuela's quota for conventional crude oil output remains 2.72m b/d, its exports of oil and gas liquids in 2000 would average about 2.94m b/d or less.

Domestic and overseas sales in 1999 by the state-owned Petroleos de Venezuela Manufacturing & Marketing (PDVSA M&M), in change of oil refining and all hydrocarbons marketing, are expected to average 2.13m b/d of crude oil, 1m b/d of locally refined petroleum products, 210,000 b/d of NGLs and 6.5m t/y of Orimulsion.

PDVSA M&M's overseas sales in 1999 are expected to break down as follows: about 1.93m b/d of crude oil, most of which being sent to its overseas operations for processing and products marketing; 604,000 b/d of locally refined petroleum products, 90,300 b/d of NGLs and 5m t/y of Orimulsion. Its domestic sales of oil, gas liquids and Orimulsion are expected to average about 396,000 b/d, compared to 382,000 b/d in 1998 and 364,000 b/d in 1997. Domestic consumption of gas liquids this year reached a record of 119,700 b/d, with NGL production capacity being 210,000 b/d.

As in 1998, about 60% of PDVSA M&M's petroleum exports go to the US, 30% go to Latin America and the Caribbean and 10% are shipped to Europe.

Oil production by PDVSA E&P and foreign operators this year is expected to average 2.93m b/d. The average in the first quarter of 1999 was well over 3m b/d. From April 1, in line with OPEC's price defence agreement, output has been fluctuating between 2.72m and 2.74m b/d. Local processing of crude oil since April 1 has fallen below 990,000 b/d, compared to more than 1.056m b/d in 1998 and a record of almost 1.1m b/d in the first quarter of 1999.

Prices of Venezuelan crude oil and products this year are expected to be above $18/barrel, compared to an average of $10.57/barrel in 1998 and $16.31/barrel in 1997. If OPEC extends oil production cuts for another year, the average price for Venezuela in 2000 might exceed $20/barrel.

PDVSA M&M has no difficulty selling hydrocarbon liquids to any of its markets. Its pricing system is flexible and competitive. Most of its exports run through refining and distribution joint ventures integrated with PDVSA N&M's system (see Part 4).