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Crude production in Venezuela's Orinoco Belt jumps to 31% of capacity: technical report

Caracas, Venezuela — The production level of state-owned Venezuela oil company PDVSA and its international partners in Orinoco Belt was up to 403,000 b/d Thursday, or 31% of its maximum capacity of 1.3 million b/d, from 234,000 b/d on October 10, according to a company technical report seen by S&P Global Platts.

This partial recovery in production is due to an increase in the availability of imported diluent, the reactivation of some wells and the partial drainage of Merey 16 crude inventories, according to the technical report.

"In October, PDVSA has negotiated the sale of 16.7 million barrels of Merey 16 so far, but it is not enough to drain oil inventories because there are still 17.4 million barrels without a market," a PDVSA official told Platts October 10.

Related story: Chevron says end of Venezuela waiver may boost oil output, help Russia

PDVSA's crude inventories rose to 34.1 million barrels in October, up from 22.7 million barrels in September, because of a lack of buyers and tankers as well as cargo cancellations. Of this total, 28.8 million barrels were Merey 16, 4.3 million barrels Boscan crude and 1.1 million barrels diluted crude oil (DCO), according to reports seen previously by Platts.

The increase impacts all businesses between PDVSA and its foreign partners in the four main blocks into which the Orinoco Belt is divided - Carabobo, Ayacucho, Junin and Boyaca.

In these blocks, PDVSA has formed seven joint ventures: Petrodelta, Petrooritupano, Petrolera IndoVenezolana, Petrolera Sinovensa, Petrocedeno, Petropiar and Petromonagas. Eight additional ventures are under development: Petroindependencia, Petrocarabobo, Petrojunin, Petromacareo, Petrourica, Petromiranda, Boyaca 8 and Junin 10.

According to Thursday's technical report, production was 229,000 b/d in the Carabobo block, 157,000 b/d in the Ayacucho block, 5,000 b/d in the Junin block and 12,000 b/d in the Boyaca block.

On October 10, production was 121,000 b/d in the Carabobo block, 95,000 b/d in the Ayacucho block, 6,000 b/d in the Junin block and 12,000 b/d in the Boyaca block.

In the Carabobo block, the Petrosinovensa (PDVSA 60%, CNPC 40) joint venture is operating at 70,000 b/d or 70.5% of its 105,000 b/d capacity. Petromonagas (PDVSA 60%, Rosneft 40%) is operating at 70,000 b/d or 58.3% of its 120,000 b/d capacity.

In the Ayacucho block, Petropiar (PDVSA 60%, Chevron 40%) is operating at 100,000 b/d or 52.6% of its 190,000 b/d capacity.

In the Junin block, the 202,000 b/d Petrocedeno venture with Total and Equinor is currently temporarily shut due to high inventory levels. The 120,000 b/d Petro San Felix project (100% PDVSA) in the Junin block is out of service indefinitely.

PDVSA could not be reached immediately for comment Thursday. PDVSA's foreign partners do not respond to requests for comment on this.

The Orinoco Belt, the main oil production area in Venezuela, is a huge reserve of extra heavy crudes that are acidic and have a high heavy metal content. It is estimated to contain 220 billion barrels of crude over 55,314 square kilometers in the southern states of Guarico, Anzoategui and Monagas.

In August, PDVSA indefinitely halted the production of upgraded Orinoco Belt synthetic crudes, and instead converted its upgraders to blending facilities for the production of Merey 16 crude.

PDVSA has continued to sell oil and buy refined products on the global market, but is facing severe challenges due to US sanctions. The US unveiled sanctions on PDVSA on January 28.

Venezuela produced 600,000 b/d of crude in September, down from 700,000 b/d in August, and 2 million b/d in January 2017, according to Platts data.

-- Newsdesk-Venezuela, newsdesk@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com