With rising prices it may not be a bad idea not to deplete reserves very quickly. The oil in the ground will be worth more later. However, perhaps Venezuela is using surplus funds for social projects instead of employing adequate amounts for re-investment in oil production. As the article notes it is not investing at the rates of other state owned companies.
Petropolitics in Latin America
A Review of Energy Policy and Regional Relations
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Stagnant production: While Venezuela has vast reserves, it has not
raised production levels.The UN Economic Commission for Latin America
and the Caribbean (ECLAC) reports that Venezuela's gross domestic
product (GDP) grew 17.9 percent in 2004, a rebound from the severe
downturn of 2002 and 2003. Estimates for 2005 set growth at about 9.3
percent. However, ECLAC also adds that "…expected GDP growth will not
come from oil production, which has yet to recover to pre–strike
levels as a result of insufficient investment. These factors have led
Venezuela to produce at levels below OPEC ceilings. Sector strength
will depend exclusively on world price increases, as […] capacity for
expanded production remains
extremely limited." Assessing how much production has fallen is
difficult without reliable PDVSA figures. While the company says
production has returned to 2000 and 2001 levels -- about 3.1 million
barrels per day (bpd) -- independent reports estimate that it did not
exceed 2.7 million bpd.
Investment: To maintain current output, Venezuela's oil industry
requires considerable annual investment, especially in exploration and
production. Evidence indicates that PDVSA investment falls
significantly short of these minimum levels. PDVSA's plan for
2005-2010 calls for investing $6.3 billion from public sources and an
extra $2.5 billion from private sources. While no official figures are
available, 2005 estimates indicate that slightly over half the PDVSA
target will be reached, less than $3.5 billion. Private investment is
also predicted to fall short of
the target due to uncertainty about foreign property rights and
investment policy. These
estimates indicate that oil output will continue to slide or, at best,
remain at current levels. PDVSA investment falls short of the
investment levels of other state-owned regional oil companies.
Estimates show that PEMEX, the state-owned Mexican petroleum company,
invested more than twice as much as PDVSA in 2003. The Brazilian
state-owned oil company, Petrobras, invested over 150 percent more. It
recently announced annual investments of $12 billion through the year
2010 -- more than three times as much as PDVSA.