OPEC

From Wikipedia, the free encyclopedia
Organization of the Petroleum Exporting Countries
Flag
Headquarters Vienna, Austria
Official language English
Type Cartel
Membership
Leaders
 • Secretary General Abdallah Salem el-Badri
Establishment Baghdad, Iraq
 • Statute 10–14 September 1960
 • in effect January 1961
Area
 • Total 13,759,546 km2
5,312,590 sq mi
Population
 • estimate 669,521,706
 • Density 48.7/km2
126.1/sq mi
Currency Indexed as USD-per-barrel
Website
www.OPEC.org

Organization of the Petroleum Exporting Countries (OPEC, /ˈpɛk/ oh-pek), is an international organization headquartered in Vienna, Austria. OPEC was established in Baghdad, Iraq on 10–14 September 1960.[1] The formation of OPEC represented a collective act of sovereignty by petroleum-exporting nations, and marked a turning point in state control over natural resources. OPEC was formed when the international oil market was largely dominated by a group of multinational companies known as the “Seven Sisters“. In the 1960s OPEC ensured that oil companies could not unilaterally cut prices.[2]:503–505

OPEC’s mission is “to coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.”[3] As of December 2015, OPEC has thirteen members:Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia (the de facto leader), the United Arab Emirates, and Venezuela.[4] As of 2014, approximately 80% of the world’s proven oil reserves were located in OPEC member countries, and two-thirds of OPEC’s reserves were located in the Middle East.[5]

According to the United States Energy Information Administration (EIA), OPEC crude oil production is an important factor affecting global oil prices. OPEC sets production targets for its member nations and generally, when OPEC production targets are reduced, oil prices increase. Projections of changes in Saudi production result in changes in the price of benchmark crude oils.[6]Within their sovereign territories, the national governments of OPEC members are able to impose production limits on both government-owned and private oil companies.[7] In December 2014, “OPEC and the oil men” ranked as number 3 on Lloyd’s list of “the top 100 most influential people in the shipping industry”.

Membership[edit]

Current members[edit]

As of December 2015, OPEC has 13 member countries: six in the Middle East (Western Asia), one in Southeast Asia, four in Africa, two in South America. Their combined rate of oil production represents approximately 40% of the world’s total:

Country Region Joined OPEC[9] Population
(July 2012)[10]
Area
(km²)[11]
Production
(bbl/day, 2014)[12]
 Algeria Africa 1969 37,367,226 2,381,740 1,721,000 (17th)
 Angola Africa 2007 18,056,072 1,246,700 1,756,000 (16th)
 Ecuador South America (1973) 2007[A 1] 15,223,680 283,560 557,000 (28th)
 Indonesia Southeast Asia (1962) 2015[A 2] 248,645,008 1,904,569 911,000 (22nd)
 Iran Middle East 1960[A 3] 78,868,711 1,648,000 3,375,000 (7th)
 Iraq Middle East 1960[A 3] 31,129,225 437,072 3,371,000 (8th)
 Kuwait Middle East 1960[A 3] 2,646,314 17,820 2,780,000 (11th)
 Libya Africa 1962 5,613,380 1,759,540 516,000 (29th)
 Nigeria Africa 1971 170,123,740 923,768 2,427,000 (13th)
 Qatar Middle East 1961 1,951,591 11,437 2,055,000 (14th)
 Saudi Arabia Middle East 1960[A 3] 26,534,504 2,149,690 11,624,000 (2nd)
 United Arab Emirates Middle East 1967 5,314,317 83,600 3,471,000 (6th)
 Venezuela South America 1960[A 3] 28,047,938 912,050 2,689,000 (12th)
Total 669,521,706 13,759,546 37,253,000
  1. Jump up^ Ecuador initially joined in 1973, left in 1992, and rejoined in 2007.
  2. Jump up^ Indonesia initially joined in 1962, left in 2009, and rejoined in 2015.
  3. ^ Jump up to:a b c d e One of five founder members that attended the first OPEC conference, in September 1960.

In October 2015, Sudan formally submitted an application to join OPEC.[13] Approval of a new member country requires agreement by three-fourths of the existing members, including all five of the founders.[14]

Former members[edit]

Country Region Joined OPEC Left OPEC
 Gabon Africa 1975 1994

Some commentators consider that the United States was a de facto member during its formal occupation of Iraq due to its leadership of the Coalition Provisional Authority.[15][16] But this is not borne out by the minutes of OPEC meetings, as no US representative attended in an official capacity.[17][18]

Leadership and decision-making[edit]

OPEC Conference at Swissotel,Quito, Ecuador, December 2010

The OPEC Conference is the supreme authority of the Organization, and consists of delegations normally headed by the oil ministers of member countries. The Conference usually meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions whenever required. It operates on the principle of unanimity, and one member, one vote.[14] However, since Saudi Arabia is by far the largest oil exporter in the world, it serves as “OPEC’s de facto leader”.[19] The chief executive of the Organization is the OPEC Secretary General.

Publications and research[edit]

Since 2007, OPEC publishes the World Oil Outlook (WOO) annually, in which it presents a comprehensive analysis of the global oil industry including medium- and long-term projections for supply and demand.[20]

Crude oil benchmarks[edit]

Main article: Benchmark (crude oil)

A “crude oil benchmark” is a standardized petroleum product that serves as a convenient reference price for buyers and sellers of crude oil. Benchmarks are used because oil prices differ based on variety, grade, delivery date and location.

The OPEC Reference Basket of Crudes is an important benchmark for crude oil prices. It is currently calculated as a weighted average of prices for petroleum blends from OPEC member countries: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE), and Merey (Venezuela).[21]

North Sea Brent Crude Oil is the leading benchmark for Atlantic basin crude oils, and is used to price approximately two-thirds of the world’s traded crude oil.[22] Other well-known benchmarks are West Texas Intermediate (WTI), Dubai Crude, Oman Crude, and Urals oil.

Spare capacity[edit]

The U.S. Energy Information Administration, the statistical arm of the U.S. Department of Energy, defines spare capacity for crude oil market management, “as the volume of production that can be brought on within 30 days and sustained for at least 90 days.” OPEC spare capacity “provides an indicator of the world oil market’s ability to respond to potential crises that reduce oil supplies.”[6]

In November 2014, the International Energy Agency (IEA) estimated that OPEC’s effective spare capacity was 3.5 million barrels per day (560,000 m3/d) and that this number would increase to a peak in 2017 of 4.6 million barrels per day (730,000 m3/d).[23] By November 2015, the IEA changed its assessment “with OPEC’s spare production buffer stretched thin, as Saudi Arabia – which holds the lion’s share of excess capacity – and its Gulf neighbours pump at near-record rates.”[24]

History[edit]

The OPEC headquarters in Vienna

In 1949 Venezuela and Iran were the first countries to move towards the establishment of OPEC by approaching Iraq, Kuwait and Saudi Arabia, suggesting that they exchange views and explore avenues for regular and closer communication among petroleum-producing nations.[25]

In 1959, the International Oil Companies (IOCs) reduced the posted price for Venezuelan crude by 5¢ and then 25¢ per barrel, and that for Middle Eastern crude by 18¢ per barrel.[25]

The First Arab Petroleum Congress convened in Cairo, Egypt, where they established an ‘Oil Consultation Commission’ to which IOCs should present price change plans to authorities of producing countries.[25] In 1959 journalist Wanda Jablonski introduced Abdullah Tariki to Juan Pablo Perez Alfonzo at the Arab Oil Congress in Cairo. They were both infuriated by the cut in posted prices by IOCs or Multinational Oil Companies (MOCs). This meeting resulted in the Maadi Pact or Gentlemen’s Agreement.[2]:499

In 1960, journalist Wanda Jablonski reported a marked hostility toward the West and a growing outcry against absentee landlordism in the Middle East. In his influential book entitled The Prize: The Epic Quest for Oil, Money, and Power, Daniel Yergin described how the Standard Oil, who controlled 75% of the US oil business, in August 1960 with no direct warning to oil exporters, announced cut of up 7 per cent of the posted prices of Middle Eastern crude oils. Esso and other oil companies unilaterally reduced the posted price for Middle East crudes.[26] Middle Eastern countries already felt resentment towards the West over the absentee landlordism of MOCs who at the time controlled all oil operations within the host countries.[2]:503

Founding[edit]

In 10–14 September 1960, the Baghdad conference was held at the initiative of the Venezuelan Mines and Hydrocarbons minister Juan Pablo Pérez Alfonso and the Saudi Arabian Energy and Mines minister Abdullah al-Tariki. The governments of Iraq, Iran, Kuwait, Saudi Arabia and Venezuela met in Baghdad to discuss ways to increase the price of the crude oil produced by their respective countries and respond to unilateral actions by the MOCs who at the time controlled all oil operations within the host countries. “Together with Arab and non-Arab producers, Saudi Arabia formed the Organization of Petroleum Export Countries (OPEC) to secure the best price available from the major oil corporations.”[27]

Iraq, Kuwait, Iran, Saudi Arabia and Venezuela were the OPEC founding member nations in 1960. Later it was joined by nine more governments: Libya (1962), United Arab Emirates (1967), Qatar (1961), Indonesia (1962–2009, rejoined 2015), Algeria (1969), Nigeria (1971), Ecuador (1973–1992, rejoined 2007), Angola (2007), and Gabon(1975–1994). The Arab countries originally called for OPEC headquarters to be in Bagdad or Beirut, but Venezuela argued for a neutral location, and so Geneva, Switzerlandwas chosen. However, on 1 September 1965, OPEC moved to Vienna, Austria.[28]

Oil exports minus imports (2008)

OPEC was founded to unify and coordinate members’ petroleum policies. Between 1960 and 1975, the organization expanded to include Qatar , Indonesia, Libya, the United Arab Emirates, Algeria, and Nigeria. Ecuador and Gabon were early members of OPEC, but Ecuador withdrew on 31 December 1992[29] because it was unwilling or unable to pay a $2 million membership fee and felt that it needed to produce more oil than it was allowed to under the OPEC quota,[30] although it rejoined in October 2007. Similar concerns prompted Gabon to suspend membership in January 1995.[31] Angola joined on the first day of 2007. Norway and Russia have attended OPEC meetings as observers. Indicating that OPEC is not averse to further expansion, Mohammed Barkindo, OPEC’s Secretary General, asked Sudan to join.[32] Iraq remains a member of OPEC, but Iraqi production has not been a part of any OPEC quota agreements since March 1998.

In the 1970s, OPEC began to gain influence and steeply raised oil prices during the 1973 oil crisis in response to US aid to Israel during the Yom Kippur War.[33] It lasted until March 1974.[34] OPEC added to its goals the selling of oil for socio-economic growth of the poorer member nations, and membership grew to 13 by 1975.[28] A few member countries became centrally planned economies.[28]

In a 1979 U.S. District Court decision held that OPEC’s pricing decisions have sovereign immunity as “governmental” acts of state, as opposed to “commercial” acts, and are therefore beyond the legal reach of U.S. courts competition law and are protected by the Foreign Sovereign Immunities Act of 1976.[35][36]

In the 1980s, the price of oil was allowed to rise before the adverse effects of higher prices caused demand and price to fall. The OPEC nations, which depended on revenue from oil sales, experienced severe economic hardship from the lower demand for oil and consequently cut production in order to boost the price of oil. During this time, environmental issues began to emerge on the international energy agenda.[28] Lower demand for oil saw the price of oil fall back to 1986 levels by 1998–99.

In the 2000s, a combination of factors pushed up oil prices even as supply remained high. Prices rose to then record-high levels in mid-2008 before falling in response to the2007 financial crisis. OPEC’s summits in Caracas and Riyadh in 2000 and 2007 had guiding themes of stable energy markets, sustainable oil production, and environmental sustainability.[28]

In April 2001, OPEC, in collaboration with five other international organisations (APEC, Eurostat, IAE, OLADE and the UNSD) launched the Joint Oil Data Exercise, which became rapidely the Joint Organization Data Initiative (JODI).

In 2003 the International Energy Agency (IEA) and OPEC held their first joint workshop on energy issues and they continued to meet since then to better “understand trends, analysis and viewpoints and advance market transparency and predictability.”[37]:7

By 2011 OPEC called for more efforts by governments and regulatory bodies to curb excessive speculation in oil futures markets. OPEC claimed this increased volatility in oil prices, disconnected price from market fundamentals. In 2011 Nymex oil future trades reached record highs. By mid-March the Nymex WTI “exceeded 1.5 million futures contracts, 18 times higher than the volume of daily traded physical crude.”[38]

While there have been some allegations that OPEC acted as a cartel when it adopted output rationing in order to maintain price in 1996, for example,[39] Jeff Colgan argued in 2013 that, since 1982, countries cheated on their quotas 96% of the time, largely neutralizing the ability of OPEC to collectively influence prices.[40]

In 2011 the U.S. Energy Information Administration estimated that OPEC would break above the US$1 trillion mark earnings for the first time at US$1.034 trillion. In 2008 OPEC earned US$965 billion.[41]

1973 oil embargo[edit]

Main article: 1973 oil crisis

In October 1973, OPEC declared an oil embargo in response to the United States’ and Western Europe’s support of Israel in the Yom Kippur War of 1973. The result was a rise in oil prices from $3 per barrel to $12 starting on 17 October 1973, and ending on 18 March 1974 and the commencement of gas rationing. Other factors in the rise in gasoline prices included a market and consumer panic reaction, the peak of oil production in the United States around 1970 and the devaluation of the U.S. dollar.[42] U.S. gas stations put a limit on the amount of gasoline that could be dispensed, closed on Sundays, and limited the days gasoline could be purchased based on license plates. Even after the embargo concluded, prices continued to rise.

The Oil Embargo of 1973 had a lasting effect on the United States. The Federal government got involved first with President Richard Nixon recommending citizens reduce their speed for the sake of conservation, and later Congress issuing a 55 mph limit at the end of 1973. Daylight saving time was extended year round to reduce electrical use in the American home. Smaller, more fuel efficient cars were manufactured.

On 4 December 1973, Nixon also formed the Federal Energy Office as a cabinet office with control over fuel allocation, rationing, and prices.[43] People were asked to decrease their thermostats to 65 degrees and factories changed their main energy supply to coal.

One of the most lasting effects of the 1973 oil embargo was a global economic recession. Unemployment rose to the highest percentage on record while inflation also spiked. Consumer interest in large gas guzzling vehicles fell and production dropped. Although the embargo only lasted a year, during that time oil prices had quadrupled and OPEC nations discovered that their oil could be used as both a political and economic weapon against other nations.[44][45]

OPEC aid[edit]

OPEC aid dates from well before the 1973–1974 oil price explosion. Kuwait has operated a program since 1961 (through the Kuwait Fund for Arab Economic Development).

The OPEC Special Fund “was conceived […] in Algiers, Algeria, in March 1975”, and formally founded early the following year. “A Solemn Declaration ‘reaffirmed the natural solidarity which unites OPEC countries with other developing countries in their struggle to overcome underdevelopment,’ and called for measures to strengthen cooperation between these countries”, operating under a reasoning that the Fund’s “resources are additional to those already made available by OPEC states through a number of bilateral and multilateral channels.” The Fund became a fully fledged permanent international development agency in May 1980 and was renamed the OPEC Fund for International Development (OFID), the designation it currently holds.[46][47]

1975 hostage incident[edit]

Main article: OPEC siege

On 21 December 1975, Ahmed Zaki Yamani and the other oil ministers of the members of OPEC were taken hostage in Vienna, Austria, where the ministers were attending a meeting at the OPEC headquarters. The hostage attack was orchestrated by a six-person team led by Venezuelan terrorist Carlos the Jackal (which included Gabriele Kröcher-Tiedemann and Hans-Joachim Klein). The self-named “Arm of the Arab Revolution” group called for the liberation of Palestine. Carlos planned to take over the conference by force and kidnap all eleven oil ministers in attendance and hold them for ransom, with the exception of Ahmed Zaki Yamani and Iran’s Jamshid Amuzegar, who were to be executed.

The terrorists searched for Ahmed Zaki Yamani and then divided the sixty-three hostages into groups. Delegates of friendly countries were moved toward the door, ‘neutrals’ were placed in the centre of the room and the ‘enemies’ were placed along the back wall, next to a stack of explosives. This last group included those from Saudi Arabia, Iran, Qatar and the UAE.

Carlos arranged bus and plane travel for the team and 42 hostages, with stops in Algiers and Tripoli, with the plan to eventually fly to Aden then Baghdad, where Yamani and Amuzegar would be killed. All 30 non-Arab hostages were released in Algiers, excluding Amuzegar. Additional hostages were released at another stop. With only 10 hostages remaining, Carlos held a phone conversation with Algerian President Houari Boumédienne who informed Carlos that the oil ministers’ deaths would result in an attack on the plane. Boumédienne must also have offered Carlos asylum at this time and possibly financial compensation for failing to complete his assignment. Carlos expressed his regret at not being able to murder Yamani and Amuzegar, then he and his comrades left the plane. Hostages and Carlos and his team walked away from the situation.

Some time after the attack it was revealed by Carlos’ accomplices that the operation was commanded by Wadi Haddad, a Palestinian terrorist and founder of the Popular Front for the Liberation of Palestine. It was also claimed that the idea and funding came from an Arab president, widely thought to be Muammar al-Gaddafi. In the years following the OPEC raid, Bassam Abu Sharif and Klein claimed that Carlos had received a large sum of money in exchange for the safe release of the Arab hostages and had kept it for his personal use. There is still some uncertainty regarding the amount that changed hands but it is believed to be between US$20 million and US$50 million. The source of the money is also uncertain, but, according to Klein, it was from “an Arab president.” Carlos later told his lawyers that the money was paid by the Saudis on behalf of the Iranians and was, “diverted en route and lost by the Revolution”.[48]

1980s oil glut[edit]

Main article: 1980s oil glut

OPEC net oil export revenues for 1972–2007[49]

In response to the high oil prices of the 1970s, industrial nations took steps to reduce dependence on oil. Utilities switched to usingcoal, natural gas, or nuclear power while national governments initiated multibillion-dollar research programs to develop alternatives to oil. Demand for oil dropped by five million barrels a day while oil production outside of OPEC rose by fourteen million barrels daily by 1986. During this time, the percentage of oil produced by OPEC fell from 50% to 29%. The result was a six-year price decline that culminated with a 46 percent price drop in 1986.

In order to combat falling revenues, Saudi Arabia pushed for production quotas to limit production and boost prices. When other OPEC nations failed to comply, Saudi Arabia slashed production from 10 million barrels daily in 1980 to just one-quarter of that level in 1985. When this proved ineffective, Saudi Arabia reversed course and flooded the market with cheap oil, causing prices to fall to under ten dollars a barrel. The result was that high price production zones in areas such as the North Sea became too expensive. Countries in OPEC that had previously failed to comply to quotas began to limit production in order to shore up prices.[50]

Responding to war and low prices[edit]

Leading up to the 1990–91 Gulf War, The President of Iraq Saddam Hussein recommended that OPEC should push world oil prices up, helping all OPEC members financially. But the division of OPEC countries occasioned by the Iraq-Iran War and the Iraqi invasion of Kuwait marked a low point in the cohesion of OPEC. Once supply disruption fears that accompanied these conflicts dissipated, oil prices began to slide dramatically.

After oil prices slumped at around $15 a barrel in the late 1990s, joint diplomacy achieved a slowing down of oil production beginning in 1998.

In 2000, Venezuela President Hugo Chávez hosted the first summit of OPEC in 25 years in Caracas. The next year, however, the September 11, 2001 attacks against the United States, and the following invasion of Afghanistan, and 2003 invasion of Iraq and subsequent occupation prompted a sharp rise in oil prices to levels far higher than those targeted by OPEC itself during the previous period. Price volatility peaked in 2008, as crude oil surged to a record US$147/b in July and then plunged to just US$32/b in December, during the worst global recession since World War II.[51]

In May 2008, Indonesia announced that it would leave OPEC when its membership expired at the end of that year, having become a net importer of oil and being unable to meet its production quota.[52] A statement released by OPEC on 10 September 2008 confirmed Indonesia’s withdrawal, noting that it “regretfully accepted the wish of Indonesia to suspend its full Membership in the Organization and recorded its hope that the Country would be in a position to rejoin the Organization in the not too distant future.”[53]Indonesia is still exporting light, sweet crude oil and importing heavier, more sour crude oil to take advantage of price differentials (import is greater than export).

Production disputes[edit]

The economic needs of the OPEC member states often affects the internal politics behind OPEC production quotas. Various members have pushed for reductions in production quotas to increase the price of oil and thus their own revenues.[54] These demands conflict with Saudi Arabia’s stated long-term strategy of being a partner with the world’s economic powers to ensure a steady flow of oil that would support economic expansion.[55] Part of the basis for this policy is the Saudi concern that expensive oil or supply uncertainty will drive developed nations to conserve and develop alternative fuels. To this point, former Saudi Oil Minister Sheikh Yamani famously said in 1973: “The stone age didn’t end because we ran out of stones.”[56][57]

On 10 September 2008, one such production dispute occurred when the Saudis reportedly walked out of OPEC negotiating session where the organization voted to reduce production. Although Saudi Arabian OPEC delegates officially endorsed the new quotas, they stated anonymously that they would not observe them. The New York Timesquoted one such anonymous OPEC delegate as saying “Saudi Arabia will meet the market’s demand. We will see what the market requires and we will not leave a customer without oil. The policy has not changed.”[58]

With regard to disputes related to international trade, OPEC has not been involved in any related to the rules of the World Trade Organization, even though the objectives, actions, and principles of the two organizations diverge considerably.[59]

Oil price decline 2014–2015[edit]

Countries by oil production (2013)

According to the New York Times the oil-drilling boom in the United States has increased oil production by over 70 percent since 2008 and has reduced the United States oil imports from OPEC by fifty per cent.[60] United States oil inventory has increased because of this new production and surplus oil.[61] The price of oil has been influenced by market participants shorting crude oil in the United States which cannot be exported.[62] The low price of oil has created record profits for oil refineries.[63]

Types of crude oil

Since 2011 the United States absorbed the rapidly increased domestic production of sweet, light, tight oil by reducing like-for-like or similar grade, imported crude oil[64] from Nigerian and other African suppliers.[60] From 2011 to 2013 fifty per cent of oil import reductions impacted light crude (API gravity35+).[65] Almost 96 per cent of the 1.8 million barrels per day (290,000 m3/d) of its growth comes from light, sweet crude from tight resource formations.[64] As domestic production continues to increase, the U.S. is facing future challenges of absorbing the light, sweet tight oil.[65]

In June 2014 crude oil prices abruptly dropped by about a third as U.S. shale oil production increased and China and Europe’s demand for oil decreased. Just before the United States rapidly backed out of the crude oil import market because of booming national production, the spot price of North Sea Brent crude oil peaked on 17 June 2014 at more than US$115 per barrel.[66]

Nigeria is the largest producer of sweet oil in OPEC. By July 2014, as the US stopped importing light sweet crude, more crude oil became available to refineries in China, India, Japan and South Korea. They collectively purchased 42% more Nigerian crude in 2014 compared with 2013. Starting in June 2014 Saudi Aramco—Saudi Arabia’s national oil and gas company and the world’s largest oil company in terms of production—discounted the price of its crude to Asian refineries[67] to compete with oil from Nigerian and other African suppliers.[60]

In their press release 27 November 2014 at the OPEC Conference in Vienna, it was announced that the ‘OECD-Americas’ was the main non-OPEC oil supply contributor to an anticipated supply growth of 1.4 million barrels per day (220,000 m3/d) to average 57.3 million barrels per day (9,110,000 m3/d) in 2015. From 2011 until mid-June 2014 the annual average price of oil was about US$110 per barrel. Since June 2014 however, the price of oil slid to US$80. OPEC argued that this drop in the price of oil was not exclusively “attributed to oil market fundamentals.” While oil market fundamentals, “ample supply, moderate demand, a stronger US dollar and uncertainties about global economic growth” contributed to the drop in price, “speculative activity in the oil market has also been an important factor.”[68]

In spite of global oversupply, on 27 November 2014 in Vienna, Saudi Oil Minister Ali al-Naimi, blocked the appeals from the poorer OPEC member states, such as Venezuela, Iran and Algeria, for production cuts. Benchmark crude, Brent oil plunged to US$71.25, a four-year low. Al-Naimi argued that the market would be left to correct itself. OPEC had a “long-standing policy of defending prices.” According to some analysts, OPEC would let price of Brent oil drop to US$60 to slow down US shale oil production.[69] In spite of a troubled economy in member countries, al-Naimi repeated his statement on Saudi inaction.[70]

By November 2014 with production at 30.56 million barrels per day (4,859,000 m3/d) OPEC entered its sixth month of exceeding their collective target production.[66] By 11 December 2014 the price of OPEC Reference Basket of Crudes had dropped to US$60.50[71] and by 13 December the price of Brent ICE dropped to US$61.85.[66] On 12 January 2015 price of OPEC Reference Basket of Crudes had dropped to US$43.55[71] In February 2015, OPEC had entered its ninth consecutive month of exceeding its collective target production.[72]

In August 2015, Venezuela President Nicolas Maduro sought an emergency OPEC meeting and joint coordination with Russia to stem the tumble in oil prices.[73] Ecuador supported Venezuela’s position.[74] Previously in February 2015, Nigeria sought to call an emergency OPEC meeting if oil prices continued to decline.[75] In April 2015, Iran and Libya called on OPEC to reduce oil output.[76] Angola and Algeria also sought a production cut in cooperation with the African Petroleum Producers Association.[77] Algeria said Mexico supported the bid to cut oil output.[78] In September 2015, President Vladimir Putin met Venezuelan President Nicolas to discuss oil policies.[79] Saudi Arabia, though, pushed OPEC to increase production levels.[80]

In mid-2015, Bank of America said that OPEC is “effectively dissolved”,[81][82] and JPMorgan Chase estimated that OPEC’s decision to maintain production was costing Saudi Arabia about $90 billion/year and probably close to $200 billion/year for OPEC as a whole.[83]

In October 2015, OPEC held an unusual meeting with oil officials from nonmember states like Russia and Mexico, in a bid to forge a common response to fallen oil prices.[84] At OPEC’s Vienna meeting on 4 December 2015, after exceeding its production ceiling for 18 consecutive months, and with Indonesia rejoining and Iranian output poised to surge with the removal of international sanctions, OPEC decided to set aside its ineffective production ceiling until the next ministerial conference in June 2016.[85][86][87] On 9 December 2015, the OPEC Reference Basket was down to US$34.80 for the first time since December 2008

Advertisements

China National Petroleum Corporation

From Wikipedia, the free encyclopedia
China National Petroleum Corporation
中国石油天然气集团公司
Type Government-owned corporation
Industry Oil and gas
Founded 1988
Headquarters Dongcheng District, Beijing,China
Key people Zhou Jiping (Chairman)
Liao Yongyuan (President)
Products Petroleum, natural gas, and other petrochemicals
Revenue Increase US$ 378.025 billion (2011)[1]
Net income Increase US$ 16.317 billion (2011)[1]
Total assets Increase US$ 481.07 billion (2011)[1]
Total equity Increase US$ 240.53 billion (2011)[1]
Owners Government of the People’s Republic of China
Employees 1,668,072 (2011)[1]
Subsidiaries PetroChina
Website www.cnpc.com.cn/en/

China National Petroleum Corporation (CNPC) (simplified Chinese: 中国石油天然气集团公司; traditional Chinese: 中國石油天然氣集團公司; pinyin: Zhōngguó Shíyóu Tiānránqì Jítuán Gōngsī)[2] is a Chinese state-owned oil and gascorporation and the largest integrated energy company in the People’s Republic of China. Its headquarters are inDongcheng District, Beijing.[3]

CNPC is the parent of PetroChina, the fourth largest company in the world in terms of revenue as of July 2014.

Corporate structure

CNPC is the government-owned parent company of publicly listed PetroChina, which was created on November 5, 1999 as part of the restructuring of CNPC. In the restructuring, CNPC injected into PetroChina most of the assets and liabilities of CNPC on its hydrocarbon exploration and production, refining and marketing, chemicals and natural gas businesses. CNPC and PetroChina develop overseas assets through a joint venture, CNPC Exploration & Development Company (CNODC), which is 50% owned by PetroChina.

In March 2014, CNPC chairman Zhou Jiping announced that CNPC would be opening six business units to private investors.[5]

History

Unlike Chinese Petroleum Corporation, which was ceded to Taiwan with establishment of the Republic of China, CNPC can be traced from the beginning as a governmental department of the People’s Republic of China government. In 1949, the Chinese government formed a ‘Fuel Industry Ministry’ dedicated to the management of fuel. In January 1952 a division of the fuel ministry was formed to manage petroleum exploration and mining, called the ‘Chief Petroleum Administration Bureau’. In July 1955 a new ministry was created to replace the Fuel Industry Ministry, called the Ministry of Petroleum. From 1955 to 1969, about 4 oil fields were found in 4 areas in Qinghai, Heilongjiang (Daqing oilfield), Bohai Bay and Songliao basin. CNPC was created on 17 September 1988, when the government decided to create a state-owned company to handle all Petroleum activities in China and disbanded the Ministry of Petroleum.[citation needed]

CNPC’s international operations began in 1993. The CNPC subsidiary SAPET signed a service contract with the government of Peru to operate Block VII in theTalara Province basin.[citation needed] This was followed[when?] by an oil contract with the government of Sudan to manage Block 1/2/4 in the Muglad oilfield.[citation needed] In August 2005 it was announced that CNPC agreed to buy the Alberta-based PetroKazakhstan for US$4.18 billion, then the largest overseas acquisition by a Chinese company. The acquisition went through on 26 October 2005 after a Canadian court turned down an attempt by LUKoil to block the sale.[6]In 2006 67% of shares were sold from the parent company to PetroChina[7] In June 1997, the company bought a 60.3% stake in the Aktobe Oil Company ofKazakhstan, and in July 1997 CNPC won an oil contract for the Intercampo oilfield and East Caracoles oilfield in Venezuela.[citation needed]

In July 1998, the government restructured the company in accordance with the upstream and downstream principle of the oil industry.[8] and CNPC spun off most of its domestic assets into a separate company, PetroChina. On 5 November 2007, HK listed PetroChina was listed as an A share in the Shanghai Stock Exchange.[citation needed]

In July 2013, CNPC and Eni signed a $4.2 billion deal to acquire a 20% stake in a Mozambique offshore natural gas block.[9]

In June 2014, the “head of a key China National Petroleum subsidiary was recalled to Beijing” and fell “from public view”.[10] Replacement of China National Petroleum’s top representative in Canada was announced in July.[10]

Operations[edit]

Fuel prices at a petrol station in Dalian

CNPC holds proven reserves of 3.7 billion barrels (590,000,000 m3) of oil equivalent. In 2007, CNPC produced 54 billion cubic metres of natural gas.[11] CNPC has 30 international exploration and production projects with operations in Azerbaijan,Canada, Iran, Indonesia, Myanmar, Oman, Peru, Sudan, Thailand, Turkmenistan, and Venezuela. The exploration projects, both domestic and overseas, are run by a wholly owned subsidiary, the Great Wall Drilling Company (GWDC).[12]

New Zealand[edit]

CNPC operates in New Zealand as CCDC NZ Drilling and has one rig, a triple stand DC rig named Rig 43. CNPC (CCDC NZ) started work over/drilling operations in the Kapuni gas fields of South Taranaki New Zealand in late 2012 for “tight gas”. The rig completed the Kapuni drilling campaign of 4 wells for STOS (Shell Todd Oil Services) in August 2013. Its next drilling project commenced August 2013 for Tag Oil with one well successfully drilled at Cheal C of a depth of just under 5,000m. The rig is currently awaiting decisions for appeals for the next stage of a drilling campaign for Tag Oil and is currently not operational during this period, with maintenance operations being carried out.

Iraq[edit]

Main article: Rumaila field

In March 2009, CNPC began development of Ahdab, an oil field in Wasit Governorate holding a modest one billion barrels, becoming “the first significant foreign investors” in Iraq.[13] The project progressed despite security problems with local farmers. Dozens of farmers complained of damage to property because of work on the site and Iraqi oil officials claimed thievery from the oil site by local farmers.[13] Adhab is not expected to be a major profit center, earning the company a projected 1 percent profit, but the field was seen as an entry strategy into Iraq.

Following Adhab, CNPC obtained a production contract during the 2009/2010 Iraqi oil services contracts tender to develop the larger “Rumaila field” with joint venture partner BP, which has an estimated 17.8 billion barrels (2.83×109 m3) of oil. It is expected that crude oil production from Rumaila will expand by 10% by the end of 2010 once the BP PLC/CNPC consortium takes over development of the field in June 2010.[14][15] A contract was also awarded to a consortium led by CNPC (37.5%), including Total (18.75%) and Petronas (18.75%) for the “Halfaya field” in the south of Iraq, which has an estimated 4.1 billion barrels (650,000,000 m3) of oil.[16][17]

Iran[edit]

CNPC became increasingly involved in development of Iranian oil fields following Western sanctions that targeted the Iranian oil and gas sectors leading many European energy companies such as Shell Oil, Repsol, and etc. to shut down operations in Iran. The CNPC along with Sinopec has been involved in various projects relating to Iran oil/gas development. As of 2011, CNPC has been developing Iran’s age-old Masjed Soleyman Oil Field, the oldest oil field of the Middle East, together with Iranian counterpart NIOC in a deal worth 200 million dollars. Production from this particular oil field was expected to increase in 2011 from 2,500 barrels (400 m3) a day to 25,000 barrels (4,000 m3) after the completion of the first phase, and to 55,000,000 bbl/d (8,700,000 m3/d) after the completion of phase 2 of the project.[18]

Syria[edit]

CNPC with Indian state oil firm, ONGC created a joint venture to acquire minority stakes ranging from about 33.3% to 38% in several mature Syrian oil and natural-gas properties. The combined entity was a notable instance of cooperation between two state oil firms that regularly competed for assets around the world.[19]

Kazakhstan[edit]

CNPC is heavily involved in the development of Kazakh oil after the acquisition of Alberta-based PetroKazakhstan, a company with all operations in Kazakhstan. The company was purchased for $4.18 billion. Political resistance in Kazakhstan to the deal was placated by the sale of a minority stake in PetroKazakhstan by CNPC toKazMunaiGaz, the Kazakh state-owned oil company.

Uzbekistan[edit]

In 2006, CNPC formed an international consortium with state-run Uzbekneftegaz, LUKoil Overseas, Petronas, and Korea National Oil Corporation to explore and develop oil and gas fields in the Aral Sea.[20]

Xinjiang Pipeline[edit]

In October 2004, CNPC began construction of a pipeline from the Middle East to Xinjiang.

Afghanistan[edit]

In December 2011, Afghanistan signed a deal with CNPC for the development of oil blocks in the Amu Darya basin, a project expected to earn billions of dollars over two decades; the deal covers drilling and a refinery in the northern provinces of Sar-e Pol and Faryab and is the first international oil production agreement entered into by the Afghan government for several decades.[21]

South Sudan[edit]

CNPC has been a major investor in South Sudan‘s oil sector.[22]

Russia[edit]

In May 2014, A 30-year deal between Russia‘s Gazprom and China National Petroleum Corporation (CNPC) which was 10 years in the making was estimated worth $400 billion. The agreement was signed at a summit in Shanghai and is expected to deliver some 38 billion cubic meters of natural gas a year, starting around 2018, to China‘s burgeoning economy.[23]

Accidents and incidents[edit]

2003 Gas Leak in Chongqing[edit]

On 23 December 2003, a gas blowout occurred at the Luojia No. 16H gas well. 243 people died, 2,142 were hospitalised.[24]

Jilin Chemical Plant[edit]

In 2005, there were explosions at a CNPC owned petrochemical plant causing six deaths, a mass evacuation, and a massive oil spill over the Songhua River.

Gas Pipeline Explosion in Sichuan[edit]

A gas pipeline exploded on 20 January 2006 in Sichuan. Reportedly, nine were killed and nearly 40 injured.[25]

2006 Gas Leak in Chongqing[edit]

A leak occurred on 25 March 2006 in the Luojia No. 2 gas well.[24] The third attempt six days after the blowout succeeded; 15,000 were evacuated.[26]

Chishui River diesel spill[edit]

In 2009 a CNPC pipeline burst, spilling 150 m3 (5,300 cu ft) of diesel oil into the Chishui River in Shaanxi province.[27]

Xingang Port oil spill[edit]

In July 2010, two pipelines exploded at an oil storage depot belonging to China National Petroleum Corp near Dalian’s Xingang Harbour in Liaoning province which spilled an estimated 1,500 tonnes of crude into the sea. The worst of the spill initially covered 180 km2 (69 sq mi).[28][29]

Suspension of operations in Chad[edit]

The operations of a CNPC subsidiary in Chad were entirely suspended in August 2013 by the country’s government after it violated environmental standards while drilling for crude oil in the south of the country.

Petrobras

From Wikipedia, the free encyclopedia
Not to be confused with Malaysian gas company Petronas.
Petróleo Brasileiro S.A.
Type Sociedade Anônima
Traded as
Industry Oil and gas
Founded 3 October 1953 (61 years)
Headquarters Rio de Janeiro, RJ, Brazil
Area served Worldwide
Key people Maria das Graças Foster (CEO)[1][2]
Almir Guilherme Barbassa (CFO)
Products Petroleum and its derivatives,natural gas, lubricant,petrochemical, fertilizer, biofuel
Revenue Increase US$ 130.0 billion (2013)[3]
Net income Increase US$ 10.0 billion (2013)[3]
Owners Brazilian Government (64 percent)[4]
Employees 80,497 (2010)[3]
Subsidiaries Petrobras Distribuidora, Transpetro,Petrobras Argentina, Braskemamong others.[5]
Website www.petrobras.com/en

Petróleo Brasileiro S.A. or Petrobras (Portuguese pronunciation: [ˌpɛtɾoˈbɾas]) is a semi-public[6] Brazilianmultinational energy corporation headquartered in Rio de Janeiro, Brazil. It is the largest company in the Southern Hemisphere by market capitalization and the largest in Latin America measured by 2011 revenues.[7][8][9]

Petrobras was founded in 1953. While the company ceased to be Brazil’s legal monopolist in the oil industry in 1997, it remains a significant oil producer, with output of more than 2 million barrels (320,000 m3) of oil equivalent per day. The company owns oil refineries, oil tankers, and is a major distributor of oil products. Petrobras is a world leader in development of advanced technology from deep-water and ultra-deep water oil production.[10][11]

In September 2010, Petrobras conducted the largest share sale in history, when US$72.8 billion worth of shares in the company were sold on the BM&F Bovespa stock exchange.[12][13] Upon the sale, Petrobras immediately became the fourth-largest company in the world measured by market capitalisation.[13][14][

Overview

Petrobras headquarters in downtown Rio de Janeiro.

Petrobras controls significant oil and energy assets in 18 countries in Africa, North America, South America, Europe, and Asia. These holdings as well as properties in Brazil give it total assets of $137.3 billion (2012). Petrobras is Latin America’s largest company with 2008 sales of $118.3 billion, according to a ranking from Latin Business Chronicle over Latin America’s Top 500 Companies. The Brazilian government directly owns 54 percent of Petrobras’ common shares with voting rights, while the Brazilian Development Bank and Brazil’s Sovereign Wealth Fund (Fundo Soberano) each control 5 percent, bringing the State’s direct and indirect ownership to 64 percent.[16] The privately held shares are traded on BM&F Bovespa, where they are part of the Ibovespa index.

Petrobras began processing oil shale in 1953, developing Petrosix technology for extracting oil from oil shale. An industrial size retort began processing shale in the 1990s.[17] In 2006, Petrobras claimed that this industrial retort had a design capacity to process 260 tonnes/hour of oil shale.[18] Petrobras operated the world’s largest oil platform — the Petrobras 36 Oil Platform – until an explosion on 15 March 2001 led to its sinking on 20 March 2001. P-36 was replaced by FPSO-Brasil. In 2007, Petrobras inaugurated the Petrobras 52 Oil Platform. The 52 is the biggest Brazilian oil platform and third in the world.[19]

Petrobras is also recognized as the largest sponsor of arts, culture, and environmental protection in Brazil. Among the environmental initiatives, Petrobras is the main supporter of whale conservation and research through the Brazilian Right Whale Project[20] and the Instituto Baleia Jubarte (Brazilian Humpback Whale Institute).[21] Petrobras has been a sponsor of the Williams Formula-1 team. The company employs the H-Bio process to produce biodiesel.[22]

According to Forbes, as of April 2011, Petrobras is the 8th largest company in the world.[23]

History

Petrobras standard model for its land oil pump, popularly known as Wooden Horse (Cavalo de Pau in Portuguese) in UFRN, Natal, Brazil.

Skyscraper hosting Petrobras’ offices in Paulista Avenue, São Paulo.

Petrobras was created in 1953 during the government of Brazilian president Getúlio Vargas, with the support of both the ruling parties and the opposition alike in Congress. However, with the creation of a new government the following year, opposition from the government emerged to Petrobras.

Petrobras commenced its activities with the collection it inherited from the old National Oil Council (pt) (Conselho Nacional do Petróleo, CNP), which, however, preserved its inspection function for the sector.

The oil exploration and production operations, as well as the remaining activities connected to the oil, natural gas, and derivative sector, except for wholesale distribution and retail via service stations, were a monopoly Petrobras held from 1954 to 1997. Early on, in 1961, it was hurt by a pessimistic government report concerning oil prospects in Brazil. Two years after the report’s release, Petrobras created its research center Cenpes.

Unfortunately, only ten years later, the company’s period of growth was halted by the 1973 oil crisis. The entire country was affected, and the “Brazilian miracle”, a period of rapid growth in the economy ended. Petrobras itself nearly went bankrupt. But, then, a year later, the company discovered an oil field in Bacia de Campos. This discovery boosted its finances and helped it restructure nationwide. In 1975, Petrobras signed contracts partnering with private oil contracts concerning exploration for more oilfields in Brazil. The company was also affected by the 1979 energy crisis, but not as bad as in 1973.

During this period, Petrobras became the leader in derivative marketing in Brazil, and, thanks to the company’s performance, it was awarded the Offshore Technology Conference (OTC) in 1992, one which it was granted again in 2001.[24]

After 40 years of exploration, production, refining, and transportation of Brazil’s oil, Petrobras started to compete with other foreign and domestic companies in 1997 when the government approved Law N.9.478. This law broke Petrobras’s monopoly and allowed for competitors to develop Brazil’s oilfields. The Brazilian government also created the National Petroleum Agency (Agência Nacional do Petróleo, ANP), responsible for the regulation and supervision of activities in the petroleum industry, and the National Council of Energy Policies, a public agency responsible for the development of public energy policy. That same year, Petrobras reached the mark of producing 1 million barrels (160,000 m3) per day. The company also executed agreements with other Latin American governments and began operations outside of Brazilian domains.

In 2000, Petrobras achieved a world record for oil exploration in deep waters. The exploration reached a depth of 1,877 metres (6,158 ft) below sea level. The following year, an accident at the P-36 Platform, the world’s largest oil platform, caused it sink on March 20. Petrobras lost about 1,500 tons of oil from this one accident alone.

In 2003, commemorating its 50 years, Petrobras doubled its daily production of oil and natural gas, surpassing the mark of 2 million barrels (320,000 m3). That same year, it acquired the Argentine company Perez Companc Energía (PECOM Energía S.A.). This acquisition also included bases in Bolivia, Peru, and Paraguay. Two years later, on December 19, 2005, Petrobras announced a contract with the Japanese Nippon Alcohol Hanbai to launch a joint-venture. The project, namedBrazil-Japan Ethanol, would import ethanol from Brazil, in a bid to develop an ethanol market in Japan.

On April 21, 2006, the company started production on the P-50 oil platform, in the Albacora East Field at Campos Basin, which gave Brazil self-sufficiency in oil production.[25] The following year, the Tupi oil field in the Santos Basin was discovered. This field could possibly be the world’s largest. In 2008, Petrobras announced the discovery of the Jupiter field, off the coast of Rio de Janeiro.

The following year, Petrobras discovered what is possibly the world’s third largest oil field in the State of São Paulo. However, no evidence has been shown for this so far. In 2009, Petrobras announced a market capitalization plan to finance its future investments in ultra-deep oil exploration. The share offering in the BM&F Bovespa Stock Exchange took place in September 2010, becoming the largest market capitalization in history, with R$ 120,4 billion (US$69,97 billion) in shares issued.[26] In 2009, it also acquired Esso‘s Chilean business. Petrobras also finalized a $10 billion loan from China in return for a ten years long supply of oil (150,000 barrels (24,000 m3) a day the first year, 200,000 barrels (32,000 m3) a day the nine others).[27]

Bolivian controversy[edit]

On May 1, 2006, Bolivia’s president Evo Morales announced the nationalization of all gas and oil fields in the country. Evo Morales ordered the occupation of all fields by the Bolivian Army. Petrobras was heavily affected by the nationalization. At the time, the company’s Bolivian subsidiary had great importance in the country’s economy:[28]

  • Petrobras represented 24 percent of the Bolivian industrial taxes, 18 percent of the country’s GDP and 20 percent of the foreign investments.
  • The company operated in 46 percent of the oil reserves in Bolivia and was responsible for 75 percent of the country’s gas exports to Brazil.
  • The company invested, between 1994 and 2005, US$1.5 billion in the Bolivian economy.

The nationalization strained the relationship between Petrobras and the Bolivian government. On October 28, 2006, after a long negotiation, Petrobras and Bolivia signed an agreement, whereby the company would take 18 percent of the profits, and the Bolivian government would take the remainder.[29]

U.S spying allegations

It emerged in September 2013 that the US government had been allegedly spying on Petrobras after Organizações Globo reported the claims on national television. The information was reportedly provided by US journalist Glenn Greenwald.[30] Petrobras announced that it was investing R$21 billion over five years to improve its data security.[31]

Business

Petrobras’ most important assets are petroleum reserves in Brazil. Its oil field in the Campos Basin accounts more than 80 percent of the Brazilian oil production. The company also works on developing “green energy”, including biodiesel fuel. Petrobras recently opened its business to the ethanol fuel, facing great competition against the North American ethanol. However, investment in biofuels will represent only 1 percent of the company’s profit between 2008 and 2012.[32]

Petrobras works extensively with foreign acquisitions too, buying and controlling some of the most important energy companies in South America and exploring huge deep-water fields of West Africa and the Gulf of Mexico. Petrobras is known for its technology in deep-water exploration. The Tupi field, which could be the world’s third largest oil field (although data is still unverified), is a deep-water discovery, located in the pre-salt layer.[clarification needed]

The company began to increase profits from 2002, with the government’s heavy investments. In the first quarter of 2008, Petrobras reached the market value of US$295.6 billion, surpassing companies such as Microsoft, BP, and Chevron-Texaco, but behind ExxonMobil and General Electric. Petrobras’ market value is also larger than Industrial and Commercial Bank of China, making it the sixth largest company by market value in the world.[33]

Petrobras is involved in the following areas of business

Petrobras’ financial growth between 2002 and 2006

  • Domestic sales: Domestic sales represent the majority of the company’s profit and include the extraction and distribution of oil, natural gas, derivatives, electricity and petrochemical products;
  • Export: The main exports are not of oil extraction itself, but are related to mechanic technologies. However, it is planned that the company starts to export oil in large quantities when it begins to explore the Jupiter and the Tupi fields (see “List of recent oil field discoveries”);
  • Foreign exchange gains: The company imports natural gas from other South American countries, mostly from Bolivia. According to the Brazilian group National Petroleum Agency, Petrobras owns Brazil’s largest and most important gas pipe network, having a near monopoly of the natural gas marketed in the country.

Growth

  • Rising prices: the company profited from rising oil prices in 2007-2008.
  • Increasing demand: oil demand has increased drastically in the emergent countries, for which Petrobras exports its technologies. The BRIC countries’ (Brazil itself, Russia, India and China) growth explains this huge demand. The Brazilian self-sufficiency in Petroleum (as of May 2006) allowed the company to export small quantities of oil.
  • Political issues: despite of being nearly half privately owned, the majority of shares belong to the Brazilian government, which gives it control of the company’s finances and operations. The recent growth of the company is explained by political stability. Since 1997 the Brazilian oil market was opened to foreign investments, but Petrobras continues to be the largest oil company in the country, enjoying a near monopoly.

Oil reserves

At the 20th National Forum, it was revealed that Petrobras, with 11.7 billion barrels (1.86×109 m3) of oil, has the fourth biggest oil reserves among petrochemical companies with publicly traded shares. The figure does not include the recent discoveries in the mega-fields of Tupi, Jupiter, Carioca and Bem-te-vi.[34]

Profitability

The discovery of large reserves in Santos Basin increased its stock price by about 19 percent in one day. Petrobras is considered the most reliable Blue Chip of the Bovespa Stock Exchange.[citation needed] While the North American Crisis of 2007 decreased the value of the stocks of a great majority of STOCK MARKETS in the world, Petrobras helped hold the Bovespa’s activities steady, making it one of the least affected stock exchanges in the world by the crisis.[citation needed]

Investment grade

On 30 April 2008, Brazil received an “investment grade” rating from Standard & Poor’s, given to countries with stable and consistent growing economy. According toStandard & Poor’s, Brazil jumped from a BB+ grade to a BBB-, the minimum level any country needs to reach to receive the grade. Petrobras played a big part in the country’s growth, and the high rating would be useful in attracting foreign investments.[citation needed]

Investors often criticize the company for not increasing gasoline prices in Brazil, in spite of increasing prices in the international market. The company is having problems adapting its business to the ethanol market.[citation needed]

Devaluation

After a great advance on its stock shares (reaching 52.30 Brazilian real (R$) in Ibovespa) in May 2008,[citation needed] Petrobras faced a devaluation in the following month, its shares decreasing to R$43.90 on 19 June 2008.[35][36][37] The most probable explanation for the great fall was the lack of information about the mega-fields recently discovered by the company.[citation needed] The great instability in Wall Street‘s markets also had great weight in those results.

Petrobras’ fall also led to bad results on the entire BM&F Bovespa, as Petrobras and Vale accounted for more than 25% of BM&F Bovespa‘s trade value,[38] the devaluation of those companies’ shares led it to lose more than 6,000 points in just 25 days.

However, with the continuous decrease of oil prices, Petrobras’ stock shares fell to R$33,00 on 14 August 2008. Its market cap presented the biggest loss of value in the Americas,[citation needed] with US$93 billion (13 August 2008).

List of recent oil field discoveries

Oil platform P-51, the first 100-percent Brazilian oil platform

Petrobras doubled its success rate at drilling new wells, 2002–5.[39]

Petrobras latest Oil Discoveries
Date Basin Field API gravity
April 18, 2006 Espirito Santo Golfinho 38[40]
July 11, 2006 Santos Tupi 30[41]
March 2, 2007 Campos Caxareu 30[42]
June 8, 2007 Espirito Santo Pirambu 29[43]
September 5, 2007 Santos Tupi 27[44]
September 10, 2007 Campos Xerelete 17[45]
September 20, 2007 Santos Tupi Sul 28[46]
December 21, 2007 Santos Caramba 27[47]
January 21, 2008 Santos Jupiter Huge Gas field[48]
May 21, 2008 Santos Bem-Te-Vi 36[49]
May 29, 2008 Santos Tiro 36[49]
June 12, 2008 Santos Guará 28[50]
July 14, 2008 Espirito Santo Golfinho 27[51]
August 20, 2008 Campos Aruanã 28[52]
September 26, 2008 Santos Sidon 36[53]
November 21, 2008 Espirito Santo Jubarte 30[54]
November 25, 2008 Jequitinhonha BM-J-3 ?[55]
January 26, 2009 Santos Piracucá ?[56]
April 8, 2009 Santos Corcovado-1 ?[57]
November 16, 2009 Campos Marimbá 29[58]

Mega-fields[edit]

The company’s most important discoveries started at the end of 2007, when the first mega-field, named Tupi, was found at a depth of 5,000 meters below the sea level, the first discovery of the company in the pre-salt layer. The second discovery was announced on January 21, 2008: the new mega-field was named Jupiterand had the same size as Tupi.[59] The company revealed no more information about the field, forcing many investors to regard those facts as an “industrial secret”.

On May 21, 2008, the company announced the discovery of a third oil megafield,[60] located 250 km distant from the state of São Paulo, at a depth between 6000 and 6300 meters below sea level. The discovery was made by a consortium formed by Petrobras (66 percent of participation), Shell (20 percent) and Galp Energia(14 percent). The field’s oil reserves had an API gravity between 25 and 28.

Criticisms

According to the Brazilian economy website InfoMoney.com, North American stock companies are considering the oil mega-field discoveries suspicious. On May 24, 2008, the company’s shares fell 4 percent because of the scarce information given by Petrobras about the fields.[61]

An article written by Roberto Altenhofen Pires Pereira for InfoMoney.com said (translated from Portuguese):

Despite the incredible advance of 14 percent in Petrobras stock shares after the discovery of Tupi and Jupiter fields, the North American answer for the shares was the worst possible. Petrobras’ ADR’s — American Depositary Receipts — fell more than 4 percent in New York. It seems that the market is interpreting the discovery with mistrust. (…) Everyone knows that the potential of the fields is huge, but that stills being only a “potential”. No concrete information about the fields’ capacity has been released at any time. These are only expectations, which still face a great technological challenge to the exploration of so deep deposits, which may even make this exploration unfeasible.

Reputation

By the end of 2003, Petrobras subscribed to the United Nations Global Compact, a voluntary agreement which encompasses a set of principles regarding human rights, working conditions and the environment. The company’s growth since 2006 has made Petrobras the most profitable company in the Brazilian economy, and gave it great importance worldwide, being recognized as the eighth biggest oil exploring company in the world.[63] Since 2006 Petrobras has been listed in the Dow Jones Sustainability Index, an important reference index for environmentally and socially responsible investors. On February 25, 2008, the Spanish consultancy firmManagement and Excellence acknowledged Petrobras as the world’s most sustainable oil company.[64]

The civil society named Transparency International, which fights against global corruption, published a list on April 28, 2008 containing the names of 42 companies with high transparency levels, in which Petrobras was included.[65]

In May 2008, World Trademark Review magazine awarded[66] the Petrobras trademark team with an Industry Award for Latin American Team of the Year, a category in which Petrobras competed with Coca-Cola, Pepsico, and Procter and Gamble.[67]

Major oil spills – 1975 to 2001[68]
Date Volume (litres) Location
March 1975 6 million Guanabara Bay
October 1983 1.5 – 3 million Bertioga
February 1984 700,000 Cubatão
August 1989 690,000 São Sebastião
January 1994 350,000 – 400,000 Campos Basin
May 1994 2.7 – 3.1 million São Sebastião
March 1997 600,000 – 2.8 Guanabara Bay
October 1998 1 – 1.5 million São José dos Campos
January 2000 1.3 million Guanabara Bay
March 2000 18,000 Tramandaí
March 2000 7,250 São Sebastião
July 2000 4 million Barigui Iguaçu Rivers
August 2000 1,800 Rio Grande de Norte
August 2000 4,000 Angra dos Reis
November 2000 86,000 São Sebastião
March 2001 1.4 million Campos Basin

Global operations

Petrobras’ global oil exploration, as shown in December 2006 with a total of 243,292 BOED

Refinery in Cochabamba, Bolivia

Petrobras global operations extends over 27 countries (including Brazil). Those operations are more related to diplomatic trades than oil exploration, although the company has important fields in India, Turkey, Angola and Nigeria. The most important countries for commercial agreements are Japan, United Kingdom and China. The complete map can be seen in Petrobras official link Petrobras Worldwide.

International Associations

Petrobras is a member of the following international associations:

New Zealand

In June 2010, Petrobras was granted a five-year permit for exploration of the Raukumara Basin, off the East Cape of New Zealand.[69] April 2011 and the Orient Explorer began surveying off the east coast of New Zealand’s North Island. Greenpeace protestors, in opposition to the deal between the New Zealand government and Petrobras, attempted to halt the work by swimming in front of the survey ship.[70] Local Maori[71] felt the risk to the local waters and fish stocks, should oil be found and drilling go ahead, was too high a price and that better consultation with local people was required.[72] In 2012 Petrobras returned their exploration licences amidst their “annus horribilis“.[71]

Petrobras in popular culture

  • Petrobras maintains a high budget to fund Brazil’s cultural production, such as films, theatre plays and scholarly works. It is the largest sponsor of culture in Brazil since the 1990s.[73]
  • In the Speed Racer live-action movie, one of the cars featured is the “Green Energy”, a biodiesel fueled racing car sponsored by Petrobras.
  • Petrobras is the main sponsor of the Brazilian Série A.
  • Petrobras was a secondary sponsor for the AT&T WilliamsF1 Team from 1998 to 2008 and has resigned with Williams F1 from 2014 onwards.
  • Petrobras was a sponsor for Flamengo in Brazil from 1984 to 2009.
  • The sauropod dinosaur Petrobrasaurus is named after this company.

Petronas

From Wikipedia, the free encyclopedia
For the Byzantine nobleman and general, see Petronas (general).
Not to be confused with the Brazilian oil company Petrobras.


PETRONAS
, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on 17 August 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. PETRONAS is ranked among Fortune Global 500‘s largest corporations in the world. Fortune ranks PETRONAS as the 75th largest company in the world in 2013. It also ranks PETRONAS as the 12th most profitable company in the world and the most profitable in Asia.[2][3][4]

Petroliam Nasional Berhad (PETRONAS)
ڤيتروليام ناسيونل برحد
Type Government-owned corporation
Industry Oil and gas
Founded 17 August 1974
Headquarters Kuala Lumpur, Malaysia
Area served Malaysia
Key people Tan Sri Shamsul Azhar Bin Abbas, Group CEO and President
Products Petroleum, natural gas,petrochemicals
Services Shipping services
Revenue Increase US$100.744 billion (2014)[1]
Net income Increase US$21.91 billion (2012)
Total assets Increase US$161.472 billion (2014)[1]
Total equity Increase US$89.29 billion (2012)
Owners Malaysian Government
Employees 39,236 (2010)
Website www.petronas.com.my

Since its incorporation, PETRONAS has grown to be an integrated international oil and gas company with business interests in 35 countries. As of the end of March 2005, the PETRONAS Group comprised 103 wholly owned subsidiaries, 19 partly owned outfits and 57 associated companies. Together, these companies make the PETRONAS Group, which is involved in various oil and gas based activities. The Financial Times has identified PETRONAS as one of the “new seven sisters“:[5] the most influential and mainly state-owned national oil and gas companies from countries outside the OECD.

The group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing andliquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemicalmanufacturing and marketing; shipping; automotive engineering; and property investment.

PETRONAS provides a substantial source of income for the Malaysian government, with 45% of the government’s budget dependent on PETRONAS’ dividend, moreover in 2011 government real balance has 5 percent deficit of Gross Domestic Product.[6]

The company is headquartered at the Petronas Towers which was officially opened on Malaysia’s 42nd National Day, 31 August 1998 – in the corporation’s 24th Anniversary year.

History

PETRONAS was not the first company to extract oil or gas in Malaysia. It was Royal Dutch Shell that began the oil exploration in Sarawak, then under the White Rajahs, at the end of the 19th century. In 1910, the first oil well was drilled in Miri, Sarawak. This became the first oil producing well known as the Grand Old Lady. Shell was still the only oil company in the area in 1963, when the Federation of Malaya, having achieved independence from Britain six years before, united with Sarawak and Sabah, both on the island of Borneo, and became Malaysia. The authorities in the two new states retained their links with Royal Dutch Shell, which brought Malaysia’s first offshore oil field onstream in 1968.

Meanwhile, the federal government turned to Esso, Continental Oil, and Mobil, licensing exploration off the state of Terengganu, in the Malay Peninsula, the most populous region and the focus of federal power. By 1974, however, only Esso was still in the area. It made its first discoveries of natural gas in that year and then rapidly made Terengganu a bigger producer of oil than either Sarawak or Sabah. By 1974, Malaysia’s output of crude oil stood at about 81,000 barrels per day (12,900 m3/d).

Setting up a state oil and gas company: 1970s

Several factors converged in the early 1970s to prompt the Malaysian government into setting up a state oil and gas company, as first proposed in its Five Year Plan published in 1971. Former Chief Minister of Sarawak, Tun Abdul Rahman Ya’kub was one of the people who proposed the idea of Malaysia setting up their own oil company. These were years in which power in the world oil industry began to shift away from the majors, which then controlled more than 90% of the oil trade, toward the Organization of Petroleum Exporting Countries (OPEC), as well as a proliferation of new private and state companies joining in the search for reserves. By 1985, the majors, reduced in number from seven to five, were producing less than 20% of the world total. It seemed that Malaysia would either have to join the trend or continue to leave its oil and gas entirely to Royal Dutch/Shell and Esso, multinational corporations necessarily attuned to the requirements of their directors and shareholders, rather than to the priorities the government of a developing country might seek to realise.

Further, an agreement between Malaysia and Indonesia, signed in 1969, had settled doubts and disputes about each country’s claims over territorial waters and offshore resources at a time when both were heavily indebted to Organization for Economic Co-operation and Development (OECD) governments and banks as well as to the International Monetary Fund (IMF) and the World Bank. Setting up a state oil and gas company, through which the government could get international capital but avoid tangling with foreign oil companies or governments, had worked for Indonesia: why not for Malaysia as well? The oil crisis of 1973–74 made the government even more aware of Malaysia’s dependence on foreign oil and foreign capital in general.

Another factor in the decision was that the technology had recently been developed for extensive exploration and drilling offshore. The local geography included a combination of broad basins of sedimentary rock with calm and shallow waters around the Sunda Shelf, making exploration for gas and oil relatively easier and more successful than in most areas of the world. Malaysian crude turned out to be mostly high quality with low sulphur content.

A final and crucial factor in the creation of PETRONAS, and its continuation in much the same form since, has been the political stability of Malaysia. Since the restoration of parliament in 1971, the country has been ruled by the National Front (Barisan Nasional), the heirs to the Alliance Party which had been dominant from 1957 to 1969 and the originators in 1971 of the New Economic Policy, which was designed to improve the economic position of Bumiputras—native Malays and other natives in Sabah and Sarawak—relative to Chinese and Indian Malaysians and to foreign corporations. The difficulties this policy has caused for foreign companies and investors are outweighed by the benefits they believe they gain from Malaysia’s political stability.

The Malaysian government chose to create a state company, rather than using taxes, production limits, leasing, or other familiar instruments of supervision. The government wanted, and needed, the co-operation of the majors but also sought to assert national rights over the use of the country’s resources. A state company, having both supervisory powers over the majors and production activities of its own, was a workable compromise between allowing the majors full rein and excluding them, along with their capital and expertise, altogether.

PETRONAS was established in August 1974 and operates under the terms of the Petroleum Development Act passed in October 1974. It was modelled onPertamina, the Indonesian state oil and gas company founded in 1971 in succession to Permina, which had been set up in 1958. According to the 1971 plan, PETRONAS’ goals would be to safeguard national sovereignty over oil and gas reserves, to plan for both present and future national need for oil and gas, to take part in distributing and marketing petroleum and petrochemical products at reasonable prices, to encourage provision of plant, equipment, and services by Malaysian companies, to produce nitrogenous fertilizers, and to spread the benefits of the petroleum industry throughout the nation.

On 6 September 1974, Malaysia’s then prime minister, Tun Abdul Razak, announced the appointment of Tengku Razaleigh Hamzah as chairman and chief executive of PETRONAS. Tun Razak said: “From among the new blood, I intended to bring Tengku Razaleigh into the Cabinet. However, I have an important job for him, a job as important as that of a Cabinet Minister. I have decided to appoint him as chairman and chief executive of PETRONAS, which is equivalent to being a Cabinet Minister.”.[7] Subsequently, Razaleigh had to relinquish his job as Chairman of PERNAS which he held from 1970, but retained the chairmanship of Bank Bumiputra.

Having created PETRONAS, the government had to choose what forms its dealings with private oil companies would take. Starting with its legal monopoly on oil and gas activities and resources, it had several options: it could simply award concessions without taking part in production, management, or profits; it could try offering services at the supply end; or it could make contracts to cover profit-sharing, production-sharing, joint ventures—sharing both profits and costs—or all stages of the process, under “carried-interest” contracts. PETRONAS’ first move was to negotiate the replacement of the leases granted to Royal Dutch/Shell on Borneo and to Esso in THE PENINSULA with production-sharing contracts, which have been the favoured instrument, alongside joint ventures, ever since. These first contracts came into effect in 1976. Allowing for royalties to both federal and state governments, and for cost recovery arrangements, they laid down that the remainder would go 70% to PETRONAS and 30% to the foreign company. Esso began oil production in two offshore fields in 1978, exporting its share of the supply, unlike PETRONAS, whose share was consumed within the country.

PETRONAS went downstream for the first time in 1976, when it was chosen by the Association of South East Asian Nations (ASEAN) to begin construction on the second ASEAN joint industrial project, a urea plant. The subsidiary, Asean Bintulu Fertilizer (ABF), is based in Sarawak and now exports ammonia and urea all over the world.

Also in 1976, Malaysia became a net exporter of oil, but exports were at such a low level as to make the country ineligible to join OPEC. This situation benefited Malaysia, and PETRONAS, by allowing the company a degree of commercial and political flexibility and reinforcing PETRONAS’ chief purpose, Malaysian self-reliance.

PETRONAS supervised its foreign partners’ oil activities, taking no direct role in production until 1978, when the government saw to the creation of a subsidiary for oil exploration and production, PETRONAS Carigali. It began its work in an oil field off THE PENINSULA. PETRONAS retained its supervisory powers over all oil and gas ventures, particularly on issues of health and safety and environmental control.

Developing natural gas: the late 1970s to the mid-1980s

The government was determined to develop Malaysia’s natural gas as well as its oil Shipping Company (MISC), of which it owned 61%. These were to take LNG exports out of Malaysia, save the cost of hiring foreign tankers, and expand the country’s fleet under its own control—in contrast to cargo shipping, which was controlled by international conferences. Shell BV, the Royal Dutch/Shell subsidiary that was building the LNG plant off Sarawak with Japanese and Asian Development Bank aid, accepted production sharing with PETRONAS but baulked at sharing equity, transport management, or refining. Negotiations went on, pushing commencement further and further back, until 1977, when PETRONAS and the government, faced with the costs of maintaining the tankers between delivery and first use, surrendered management rights—leading to a repeal of part of the Petroleum Development Act—and settled for PETRONAS’ taking 60% of equity in the new company Malaysia LNG. The Sarawak state government took 5%, and the other 35% was divided equally between Shell BV and the Mitsubishi Corporation. Production of LNG in Sarawak at last began in 1983.

After negotiations lasting from 1977 to 1982, PETRONAS had concluded contracts with Tokyo Electric Power and Tokyo Gas for the sale and delivery of LNG through to the year 2003. Malaysia LNG was to send almost the entire output of its Bintulu gas fields to Japan, under these contracts and another one, signed in 1990, to supply Saibu Gas of Fukuoka, in southwestern Japan, for 20 years from 1993.

When in 1982 PETRONAS Carigali formed an exploration and production company with Société National Elf Aquitaine of France, it allowed Elf better terms for recovering costs than it had offered in earlier ventures. This development came against the background of the government’s imposition of a depletion policy on PETRONAS, Royal Dutch Shell, and Esso in trying to postpone the exhaustion of oil reserves. These were then estimated to be about 2.84 billion barrels (452,000,000 m3), and it was officially predicted that by the late 1980s Malaysia would be a net oil importer once again. By 1980, oil and gas already represented 24% of Malaysian exports, and the government decided to impose a tax on these exports at a 25% rate. The new policy and the new tax combined to cause Malaysia’s output and exports of crude oil to fall in 1981 for the first time since PETRONAS was established. Output rose again, beyond its 1980 level, in the following year, but exports took until 1984 to surpass their 1980 level.

However, the depletion policy was being undermined by external circumstances. Through the early 1980s, a worldwide oil glut, which OPEC proved unable to control, forced the Malaysian government to increase production to offset deterioration in its balance of increased payments to a deficit of $1 billion. It became clear that this could only be sustained by relaxing the conditions for joint ventures between PETRONAS and the major oil companies. In 1982, the PETRONAS–government share, which had risen to 80%, was cut to 70%, and taxes on company income were also cut.

PETRONAS went into refining and distribution in 1983. It initiated the construction of refineries at Malacca and at Kerteh to reduce its dependence on Royal Dutch/Shell’s two refineries at Port Dickson and Esso’s refinery in Sarawak. These two majors, and other foreign companies, already covered much of the domestic retail market, but the new subsidiary PETRONAS Dagangan was given the initial advantage of preference in the location of its stations. By 1990, 252 service stations carried the PETRONAS brand, all but 20 on a franchise basis, and another 50 were planned. Some were set up on grounds of social benefit rather than of strict commercial calculation.

As production from Royal Dutch/Shell and Esso’s existing fields moved nearer depletion, the companies sought new fields and new contracts. In 1985, the government and PETRONAS revised the standard production-sharing contract, increasing the rate of recovery of capital costs from 30% to 50% of gross production in the case of oil and from 35% to 60% in the case of natural gas, abolishing signature, discovery, and production bonus payments and increasing the foreign partners’ share of the profits. At first the drastic fall in oil prices during 1986, which cut Malaysia’s income from exported oil by more than a third even though the volume of exports rose by 16%, discouraged interest in the new arrangements, but by 1989 PETRONAS had signed 22 new contracts with 31 companies from 11 countries. However, the contract period was still restricted to five years—compared, such as, with the 35-year contracts available in neighbouring Singapore—and there was still a 25% levy on exported crude oil, a measure that was intended to promote the domestic refining industry. These conditions, cited as disincentives to foreign investment, were eventually relaxed over the next several years.

The government and PETRONAS aimed to encourage the replacement of fast-depleting oil within Malaysia itself and simultaneously to foster heavy industries which could help reduce the country’s overwhelming dependence on exporting its natural resources. In 1980, petroleum products accounted for 88% of the country’s commercial consumption of energy, the rest being provided from hydroelectric plants in Sarawak, too far away from the main population centres to become a major alternative. Five years later, gas accounted for 17%, hydroelectricity for 19%, coal for 2%, and petroleum products for 62% of such consumption, and about half of each year’s gas output was being consumed in Malaysia.

The PETRONAS venture responsible for this shift in fuel use, and—along with Malaysia LNG—for Malaysia’s becoming the third largest producer of LNG in the world, was the Peninsular Gas Utilization Project (Projek Penggunaan Gas Semenanjung), the aim of which was to supply gas to every part of THE PENINSULA. Its first stage was completed in 1985, following the success of smaller gasification projects in the states of Sarawak and Sabah, and involved the extraction of gas from three fields in the Natuna Sea, between the Peninsula and the island of Borneo; its processing in a plant at Kertih on the Peninsula’s east coast; and its distribution to the state of Terengganu by pipeline and abroad via an export terminal.

PETRONAS’ least happy venture was its ownership of the Bank Bumiputra, the second-largest, but least-profitable, of the commercial banks incorporated in Malaysia. PETRONAS spent more than MYR3.5 billion over five years trying to rescue the bank from the impact of the bad loans it had made, starting with its support of the Carrian property group of Hong Kong, which collapsed in 1985, taking the bank’s share capital down with it. In 1991, PETRONAS sold the bank back to another state company, Minister of Finance Inc., and announced its intention to concentrate on oil, gas, and associated activities in future.

Just as PETRONAS was disposing of this liability, the crisis caused by the Iraqi regime’s invasion of Kuwait culminated in military action against Iraq on behalf of the United Nations. PETRONAS had already raised Malaysia’s oil production rate from 605,000 to 650,000 barrels per day (103,000 m3/d) in late 1990 as the crisis unfolded. This move only reinforced the company’s awareness of the need to vary its policies, since, with known reserves of 2.94 billion barrels (467,000,000 m3), and assuming no new major finds of oil, Malaysia risked seeing output decline to 350,000 barrels per day (56,000 m3/d) in 2000 and running down to depletion within another five years. This was exacerbated by the possibility that Southeast Asia in general would enjoy rapid economic growth in the 1990s, so that demand for oil there would rise twice as fast as demand in the relatively more sluggish, more mature economies of North America and Europe. The Malaysian government, and its state oil and gas company, was forced to decide what mixture of policies to adopt in response.

Battling oil depletion: the late 1980s

Fortunately for Malaysia, exploration was by no means at an end and could yet produce more reserves. The Seligi field, which came onstream at the end of 1988 and was developed by Esso Production Malaysia, was one of the richest oilfields so far found in Malaysia waters, and further concessions to the majors would encourage exploration of the deeper waters around Malaysia, where unknown reserves could be discovered. Meanwhile, computerised seismography made it both feasible and commercially justifiable to re-explore fields which had been abandoned, or were assumed to be unproductive, over the past century. In 1990, PETRONAS invited foreign companies to re-explore parts of the sea off Sabah and Sarawak on the basis of new surveys using up-to-date techniques.

Another way to postpone depletion was to develop sources of oil, and of its substitute, natural gas, outside Malaysia. Late in 1989, the governments of Vietnam andMyanmar (Burma) invited PETRONAS Carigali to take part in joint ventures to explore for oil in their coastal waters. In 1990, a new unit, PETRONAS Carigali Overseas Sdn Bhd, was created to take up a 15% interest in a field in Myanmar’s waters being explored by Idemitsu Myanmar Oil Exploration Co. Ltd., a subsidiary of the Japanese firm Idemitsu Oil Development Co. Ltd., in a production sharing arrangement with Myanma Oil and Gas Enterprise. Thus began PETRONAS’ first oil exploration outside Malaysia. In May 1990, the governments of Malaysia and Thailand settled a long-running dispute over their respective rights to an area of 7,300 square kilometres in the Gulf of Thailand by setting up a joint administrative authority for the area and encouraging a joint oil exploration project by PETRONAS, thePetroleum Authority of Thailand, and the US company Triton Oil. In a separate deal, in October 1990, the Petroleum Authority of Thailand arranged with PETRONAS to study the feasibility of transferring natural gas from this jointly administered area, through Malaysia to Thailand, by way of an extension of the pipelines laid for the third stage of the Peninsular Gas Utilization Project.

That project was on course to becoming a major element in the postponement of oil depletion. Contracts for line pipes for the second stage of the project were signed in 1989 with two consortia of Malaysian, Japanese, and Brazilian companies. This stage, completed in 1991, included the laying of 730 kilometres of pipeline through to the tip of THE PENINSULA, from where gas could be sold to Singapore and Thailand; the conversion of two power stations—Port Dickson and Pasir Gudang—from oil to gas; and the expansion of PETRONAS’ output of methyl tert-butyl ether (MTBE), propylene, and polypropylene, which were already being produced in joint ventures with Idemitsu Petrochemical Co. of Japan and Neste Oy of Finland. The third and final stage of the project was to lay pipelines along the northwest and northeast coastlines of the Peninsula and was completed in 1997.

Another new venture in 1990 was in ship-owning, since PETRONAS’ existing arrangements with MISC and with Nigeria’s state oil company would be inadequate to transport the additional exports of LNG due to start in 1994, under the contract with Saibu Gas. PETRONAS did not lose sight of the government’s commitment to Malaysian self-reliance, and the company’s second refinery at Malacca, completed in 1994, with a capacity of 100,000 barrels per day (16,000 m3/d), promoted the same policy. The fact that it was built in a joint venture with Samsung of Korea, the Chinese Petroleum Corporation of Taiwan, and Caltex of the United States did not negate the policy, for the subsidiary company PETRONAS Penapisan (Melaka) had a decisive 45% of equity while sharing the enormous costs of and gaining advanced technology for the project. More to the point, a side effect of the refinery’s completion was that PETRONAS was able to refine all of the crude oil it produced, instead of being partially dependent on refining facilities in Singapore.

PETRONAS, with its policies of promoting self-reliance, helping to develop associated industries, and varying the sources and uses of oil and gas, played an important role in the Malaysian economy as a whole. Under governments which—by current, if not historical, Western standards—were strongly interventionist, the contribution of oil taxes to the federal government’s revenue hovered at around 12% to 16% until 1980, when it showed a marked increase to 23%, followed by another leap to 32% in 1981. From then until 1988 the proportion fluctuated between 29% and 36%. PETRONAS was not just another big oil company: it controlled a crucial sector of the economy and remained, for better or worse, an indispensable instrument of the state.

Expanding globally: the 1990s and beyond[edit]

A Petronas station seen in Pattaya,Thailand.

During the mid- to late 1990s, international exploration, development, and production remained key components in PETRONAS’ strategy along with diversification. A key discovery was made in the RUBY field in Vietnam in 1994. That year, the firm also saw its first overseas production from the Dai Hung field in Vietnam and established its first retail station outside of Malaysia in Cambodia.[citation needed] In 1995, a subsidiary was created to import, store, and distribute liquefied petroleum gas (LPG). In addition, the company’s polyethylene plant in Kerteh began operations. PETRONAS marked a significant milestone during this time period—two of its subsidiaries, PETRONAS Dagangan Bhd and PETRONAS Gas Bhd, went public on the Kuala Lumpur Stock Exchange. Between 1993 and 1996, it purchased the former sub-Saharaian branch of Mobil Oil, rebranded as Engen Petroleum.

In 1996, PETRONAS entered the aromatics market by way of a joint venture that created Aromatics Malaysia Sdn Bhd. It also formed a contract with China National Offshore Oil Corporation and Chevron Overseas Petroleum Ltd. to begin exploration of block 02/31 of the Liaodong Bay area in China. While the Asian economy as a whole suffered from an economic crisis during 1997 and 1998, Malaysia was quick to bounce back due to successful government reforms. From its new headquarters in the PETRONAS Twin Towers, the state-owned concern continued its development in the oil and gas industry. Soon India’s Liberty Group purchased a 1% stake in Petronas

During 1997, PETRONAS heightened its diversification efforts. The firm set plans in motion to build three petrochemical plants in Kuantan as well as an acetic facility in Kerteh. Its first LPG joint venture in China was launched that year and the company acquired a 29.3% interest in Malaysia International Shipping Corporation Berhad (MISC). In 1998, PETRONAS’ tanker-related subsidiary merged with MISC, increasing PETRONAS’ stake in MISC to 62%. That year, PETRONAS introduced the Petronas E01, the country’s first commercial prototype engine. The company also signed a total of five new production sharing contracts (PSCs) in 1998 and 1999, and began oil production in the Sirri field in Iran.

PETRONAS entered the new century determined to expand its international efforts. The company forged deals for two new exploration plots in Pakistan and began construction on the Chad-Cameroon Integrated Oil Development and Pipeline Project. By 2002, PETRONAS had signed seven new PSCs and secured stakes in eight exploration blocks in eight countries, including Gabon, Cameroon, Niger, Egypt, Yemen, Indonesia, and Vietnam. The firm also made considerable progress in its petrochemicals strategy, opening new gas-based petrochemical facilities in Kerteh and Gebeng.

By 2003, Malaysia was set to usurp Algeria as the world’s second-largest producer of LNG with the completion of the Malaysia LNG Tiga Plant. Prime Minister Mahathir Mohamad commented on the achievement in a May 2003 Bernama News Agency article, claiming that “the PETRONAS LNG complex now serves as another shining example of a vision realized of a national aspiration, transformed into reality by the same belief among Malaysians that ‘we can do it.'” Indeed, PETRONAS had transformed itself into a global oil company over the previous decade, becoming a national symbol for success. The company realised, however, that it would have to continue its aggressive growth strategy to insure its survival in the years to come.

The PETRONAS overseas expansion drive continues with the acquisition of Woodside Energy Ltd Mauritania assets for $418 million in 2007.[8] The venture proved successful as they discovered oil in May 2008[9]

In 2004, Minister in the Prime Minister’s Department, Datuk Mustapa Mohamed[citation needed], stated that PETRONAS contributed RM 25 Billion to the country’s treasury accounting for 25% of revenue collected via dividends and other revenues. PETRONAS continuously provides the Malaysian government dividends from its profits. Since inception in 1974, PETRONAS have paid the government RM 403.3 billion, with RM 67.6 billion in 2008. The payment represents 44% of the 2008 federal government revenue.[10] PETRONAS continues to focus on international exploration projects as 40% of revenue in 2008 was derived from international projects such as Iran, Sudan, Chad and Mauritania. The company’s international reserves stood at 6.24 billion barrels oil equivalent in 2008.[11]

On 29 October 2012, PETRONAS sources said it will renew a bid for gas producer Progress Energy Resources after Canada blocked its bid earlier this month. The $6-billion bid was approved by Ottawa on 7 December 2012.[12]

On 17 January 2013, PETRONAS issued a statement that an onshore oil and gas discovery has been made in the state after drilling a test well about 20 kilometres away from the city of Miri in northern Sarawak. The well was found to have a net hydrocarbon thickness of 349 meters. It had flow rates of 440 barrels of crude oil per day and 11.5 million standard cubic feet of gas per day. The find is the first onshore oil discovery in Malaysia in 24 years. [13]

[edit]

Petronas logo used until 2013

PETRONAS Logo was created in 1974 by Dato’ Johan Ariff of Johan Design Associates.[14] He is also responsible in creating the Logo of many PETRONAS subsidiaries, JVs, link-companies and properties, including Kuala Lumpur City Centre (KLCC), MISC, MMHE, Universiti Teknologi PETRONAS (UTP), Kuala Lumpur Convention Centre, Putrajaya Holdings, Prince Court Medical Centre (PCMC), PETLIN, Malaysian Petroleum Club and Mesra Mall, to name a few.

Logo Concept

The basic structure is geometric, embodying metaphoric and alpha glyphic nuances of an oil drop and a typography ‘P’, the latter being evident in the triangle assigned at the top right corner. The triangle is also an essential element to define directional movement and dynamism. The placement of a solid circle in the Logo is interpretive if the wheel of the oil and gas industry while outline of the drop simulates a driving system, the energy which to be derived from oil.

The Corporate Colour chosen for the Logo is EMERALD Green, an obvious reference to the sea from where oil and gas are drilled.

The Corporate Logotype named ‘Alpha PETRONAS’ is designed in uppercase exclusively for PETRONAS and its subsidiaries. Each alphabet is rendered with a rounded profile to assume fluidity and viscosity, while emphasising the oil based operation.

Logo Refreshed

PETRONAS recently introduced a refreshed version of its corporate logo[15] at the 2013 Asia Oil and Gas Conference (AOGC 2013). A renewed “look and feel” has been incorporated to the original PETRONAS’ oil drop logo to reflect the visual expression of PETRONAS’ Group Positioning, reimagining energy™. The refreshed logo is part of a group-wide exercise to further strengthen the visual potential of PETRONAS’ corporate icon by making it more contemporary while building on the existing equity and legacy of the PETRONAS brand.

In essence, the refreshed logo symbolises the growth and progression of the PETRONAS brand. PETRONAS was established during the oil and gas crisis in the early 1970s. Over the years it has focused on building its business and operational capabilities and continues to seek more efficient and better methods of managing and adding value to Malaysia’s oil and gas resources and meet increasing energy demands. This challenging spirit has propelled PETRONAS from being a manager of Malaysia’s hydrocarbon resources to become a fully integrated oil and gas multinational. The organisation was among the earliest national oil companies (NOC) to venture globally which has inspired many other NOCs to join the global oil and gas arena, changing the dynamics of today’s oil and gas industry. PETRONAS will continue to play an active role in oil and gas by focusing on collective efforts to do things differently by challenging industry norms to achieve real sustainable long-term growth. Throughout its journey, PETRONAS has ensured that people benefit from its activities through business and employment opportunities, education sponsorship and quality products and services.

The refreshed version is PETRONAS’ third generation logo. The original PETRONAS logo was developed in 1974 when PETRONAS was first incorporated. The basic structure comprises an oil drop feature and symbol “P” that conveys its core business in oil and gas, and dynamism of the company. At the centre of the oil drop is a solid circle that symbolises the complete cycle or value chain of the oil and gas industry. Meanwhile, the familiar PETRONAS emerald green represents the seas and land where oil and gas originates. The refreshed logo’s softer curves have been added to the oil drop which depicts a continuous flow that symbolises PETRONAS’ drive for progress and challenging spirit in meeting the energy demands and expectations of its stakeholders. The PETRONAS name has been repositioned below the oil drop and the font has been sharpened to enhance visibility and give prominence to the oil drop in the logo.

Subsidiaries

PETRONAS has more than 100 subsidiaries and around 40 Joint Venture companies in which PETRONAS has at least 50% stake in the company. Although PETRONAS is considering to listing more of its subsidiaries,[17] so far the company has listed at least 3 of its subsidiaries in the Bursa Malaysia.

PETRONAS Dagangan Berhad

A Petronas petrol station at km 54, Karak-Kuala Lumpur Highway

Involved in the distribution and sale of finished petroleum products and operations of service stations for the domestic market. The company has over 800 petrol stations around Malaysia as of July 2007[18]and further increase to 870 stations in January 2008[19]

The company has also teamed up with local food and beverage companies, banks and transportation companies to provide better services at their petrol stations. Companies include McDonald’s, Kentucky Fried Chicken, Dunkin’ Donuts, Konsortium Transnasional Berhad, Maybank, and CIMB Bank.

PETRONAS Gas Berhad

Involved in the provision of gas processing and transmission services to PETRONAS and its customers as a throughput company. Owns and operates thePeninsular Gas Pipeline which is 2,550 kilometres in length and runs from Kerteh in Terengganu to Johor Bahru in the South and Kangar in the North of Peninsular Malaysia.

MISC Berhad

Main article: MISC Berhad

Involved in ship-owning, ship-operating and other logistics and maritime transportation services and activities. Currently has the largest fleet of LNG transport vessels

KLCC Properties Berhad

Main article: KLCC Properties

Involved in the development and the management of the Kuala Lumpur City Centre project which includes the Petronas Twin Towers, Menara Exxon Mobil andKLCC Park. Other properties under its care include Dayabumi Complex which located near Dataran Merdeka.

PETRONAS Chemicals

The PETRONAS Chemicals is the latest company to be publicly listed. The IPO was done on 26 November 2010 with investor rise around US$4.40 billion, effectively become one of the largest IPO exercise in South East Asia.[20]

The business is the largest petrochemical producer and seller in South East Asia. Products include olefins, polymers, fertilisers, methanol and other basic chemicals and derivative products[21]

Malaysian Marine and Heavy Engineering

MMHE was listing on 29 October 2010 with MYR 1 billion raised on its IPO exercise.

The business builds offshore structures for oil and gas applications, help repair large vessels and converts vessels into Floating production storage and offloadingand FSOs.[22]

Other principal subsidiaries

Some of the key subsidiaries are:-

Others include PETRONAS Assets Sdn Bhd; PETRONAS Maritime Services Sdn Bhd; PETRONAS Trading Corp. Sdn Bhd; PETRONAS Argentina S.A.; PETRONAS Australia Pty Ltd.; PETRONAS Thailand Co. Ltd.; PETRONAS Energy Philippines Inc.; PETRONAS Cambodia Co. Ltd.; PETRONAS Technical Services Sdn Bhd; PETRONAS Group Technical Solutions Sdn Bhd; PETRONAS South Africa Pty Ltd.; PETRONAS India Holdings Company Pte Ltd.; PETRONAS China Co. Ltd.; PETRONAS International Corp. Ltd.; PETRONAS Marketing Thailand Co. Ltd.; Myanmar PETRONAS Trading Co. Ltd.; PETRONAS Marketing (Netherlands) B.V.and Indianoil Petronas

Motorsport

Visible Petronas logo on the car of BMW Sauber F1.

Petronas has sponsored the Formula One Malaysian Grand Prix as the title sponsor since its inaugural race in 1999.

Team Petronas Syntium Proton competed in the 2002, 2003 and 2004 British Touring Car Championship seasons.

Petronas has supported TOM’S, aToyota automobile racing squad inSuper GT since 2008.

PETRONAS was one of the main sponsors of the BMW Sauber Formula One team alongside Intel, and it supplies lubricants and fuel to the team. It also owned 40% ofSauber Petronas Engineering, the company that builds chassis which formerly usedFerrari designed engines used by the Sauber team, until being bought out by German motor company BMW. PETRONAS is also the main sponsor for Malaysian Grand Prix, and co-sponsors the Chinese Grand Prix. PETRONAS was the exclusive premium partner of the Sauber Petronas (1995–2005) and BMW Sauber F1 Team(2006–2009). BMW had acquired the controlling stake of the former Sauber Petronas Engineering, but left the sport after the 2009 season. On 21 December 2009, PETRONAS was confirmed as moving from BMW Sauber to the newly formedMercedes Grand Prix team.[23]

In terms of further Formula One involvement, every year PETRONAS took the BMW Sauber team to various parts of Malaysia for F1 demos so the public who are unable to go to the track itself get to experience a little bit of what F1 offers. Other promotional events are held in the run up to the race and the drivers play an integral part in this so much so that Nick Heidfeld conceded that there were more fans for BMW Sauber in Malaysia than in most other countries.

As part of its corporate social responsibility programme, PETRONAS also brings underprivileged children to watch the race.

PETRONAS also sponsors the Malaysian Cub Prix races. It also sponsors many other sporting events and teams, mostly motorsports. Some of these sponsorships includes the PERT (Petronas EON Rally Team), the now defunct Foggy Petronas Superbike team (in which PETRONAS debutes their own superbike, the FP1), and also the Petronas Adventure Team, a 4X4 adventure team. More recently Petronas is also a major sponsor for PETRONAS TOYOTA TEAM TOM’S which is currently participating in Super GT series, which they won the team title in 2008 and driver title in 2009. The series also race in Malaysia every season at Sepang International Circuit. PETRONAS signed a three-year sponsorship agreement with Fiat Yamaha motoGP team. The PETRONAS branding can be seen startingQatar race on the 10 to 12 April 2009.

Since 2010, PETRONAS is also the main sponsor of Mercedes Grand Prix team.

Education

PETRONAS awards education sponsorships in the form of convertible loans to Malaysian and international students to further their studies at local or foreign universities. The PETRONAS unit that is responsible for handling education matters is called the Sponsorship & Talent Sourcing Unit (STS). These sponsorships are awarded based on academic results, co-curricular activities, family background as well as an assessment of student personality (which is conducted throughout a program called EduCamp, which all prospective PETRONAS students are required to undergo). Students who are absorbed by PETRONAS at the end of their tertiary studies have their convertible loans converted into full scholarships. These students are under contract agreement to work for the company for two years for every one year they are sponsored. PETRONAS has its own university, Universiti Teknologi PETRONAS (UTP). Built in 1997, the campus is located in Seri Iskandar, Perak.

PDVSA

 

From Wikipedia, the free encyclopedia
  (Redirected from Petróleos de Venezuela S.A.)
Petróleos de Venezuela S.A.
Type State-owned enterprise
Industry Oil and gas
Founded 1976
Headquarters Caracas, Venezuela
Key people Rafael Ramirez, President
Products Fuel, natural gas and otherpetrochemicals
Revenue Increase $114 billion (2013)[1]
Net income Increase $15.8 billion (2013)[1]
Total assets Increase $231.1 billion (2013)[1]
Owners Venezuelan government
Subsidiaries PDV Marina
CVP
Pequiven
CIED
PDVSA Gas
PDV (Deltaven)
Palmaven
Electricidad de Caracas, C.A. (93.62%)[2]
Citgo (100%)[3]
more…
Website www.pdvsa.com (Spanish)

Petróleos de Venezuela, S.A. (PDVSA, Spanish pronunciation: [peðeˈβesa]) (Petroleum of Venezuela) is the Venezuelanstate-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil, as well as exploration and production of natural gas. Since its founding on 1 January 1976 with the nationalization of the Venezuelan oil industry, PDVSA has dominated the oil industry of Venezuela, the world’s fifth largest oil exporter.

Oil reserves in Venezuela are the largest in the world, and the state-owned PDVSA provides the government of Venezuela with substantial funding resources. The government of Venezuela treats PDVSA as a cash-cow,[4] and the company only hires political supporters of the president.[5] Between 2004 and 2010 PDVSA contributed $61.4 billion to the government’s social development projects. Around half of this went directly to various Bolivarian Missions, with the remainder distributed via the National Development Fund.[6] Incompetence has led to serious inefficiencies and accidents.[7]

Reserves and capacity

PDVSA Gas, Isla de Margarita.

Venezuela has 77.5 billion barrels (1.232×1010 m3) of conventional oil reserves according to PDVSA figures, the largest in the Western Hemisphere and making up approximately half the total. This puts Venezuela as fifth in the world in proven reserves of conventional oil. By also including an estimated 235 billion barrels (3.74×1010 m3) of tar-like extra heavy crude oil in the Orinoco Belt region, Venezuela claims to hold the largest hydrocarbon reserves in the world. Venezuela also has 150 trillion cubic feet (4.2×1012 m3) of natural gas reserves.

PDVSA has a production capacity, including the strategic associations and operating agreements, of 4 million barrels (640,000 m3) per day (600,000 m³). Officials say production is around 3.3 million barrels per day (520,000 m3/d) although most secondary sources such as OPEC and the EIA put Venezuela’s output at least 500,000 barrels per day (79,000 m3/d) lower.

Politicization

In 2006, Rafael Ramírez, the energy minister, gave PDVSA workers a choice: Support President Hugo Chávez, or lose their jobs. The minister also said: “PDVSA is red [the color identified with Chávez’s political party], red from top to bottom”. Chávez defended Ramírez, saying that public workers should back the “revolution”. He added that “PDVSA’s workers are with this revolution, and those who aren’t should go somewhere else. Go to Miami“.[8]

PDVSA continues to hire only supporters of the president, and PDVSA revenue is used to fund political projects. [9]

History

1980s/1990s

PDVSA purchased 50% of the United States gasoline brand Citgo from Southland Corporation in 1986 and the remainder in 1990.[10]

2000s

Filling station in Venezuela of PDV (a subsidiary of PDVSA)

In December 2002 the Venezuelan general strike of 2002-2003 saw many of PDVSA’s managers and employees (including the CTV trade union federation) lock out workers to pressure Venezuelan president Hugo Chávez to call early elections, and virtually stop oil production for 2 months. 19,000 employees left their jobs and the government reestablished production with employees loyal to the Chávez government.

The International Labour Organization (ILO) called on the Venezuelan government to launch “an independent investigation into allegations of detention and torture”, surrounding this strike.[2] The strike caused substantial macroeconomic damage, pushing unemployment up by 5% to a peak of over 20% in March 2003.[3] The company has since formed its own militia, which all employees join on a voluntary basis, to ward off a potential “coup” by the government. It considers itself virtually indistinguishable from the state, its social programs more or less running the country’s socialist revolution.[11]

In 2005 PDVSA opened its first office in China, and announced plans to nearly triple its fleet of oil tankers, to 58.[4]

In April and May 2005, PDVSA, per an agreement signed between the governments of Venezuela and Argentina, sent 50 million tonnes of fuel oil to the latter to alleviate the effects of an energy crisis due to a shortage of natural gas.

In November 2005, PDVSA and its subsidiary in the US, Citgo, announced an agreement with Massachusetts to provide heating oil to low income families in Boston at a discount of 40% below market price.[5] Similar agreements were later set up with other states and cities in the US Northeast including New York’s Bronx,Maine, Rhode Island, Pennsylvania, Vermont and Delaware. Under the program, Citgo offered a total of around 50 million US gallons (190,000 m3) of heating oil at below market prices, equivalent to a discount of between 60 and 80 cents a gallon.

In February 2006 PDVSA completed ISO 9001:2000 process certification for its distribution system.[6]

On 28 July 2006, credit ratings agency Moody’s Investor Service said it was removing its standalone ratings on PDVSA because the oil company does not provide adequate operational and financial information. PDVSA has still not filed its 2004 financial results with the US Securities and Exchange Commission that were due in June 2005.

In 2007, PDVSA bought 82.14% percent of Electricidad de Caracas company from AES Corporation as part of a renationalization program. Subsequently the ownership share rose to 93.62% (December 2008).[2]

PDVSA has made contributions to the protection of the environment through showcase projects in shanty towns and waste removal.[12]

PDVSA is Latin America’s third-largest company, according to the a ranking of the region’s top 500 companies from Latin Business Chronicle.[13]

2010s[edit]

In 2010, PDVSA loaned the government of Antigua $68 million to repurchase all remaining shares of West Indies Oil Company (WIOC) from Bruce Rappaport‘s National Petroleum Ltd.[14]

In 2012, PDVSA announced that it would enter into a joint venture agreement with Eni SpA and Repsol in order to initiate a gas production project at the Cardon VI gas block in Venezuela. Production from this joint venture is estimated to reach between 80-100 million cubic meters of gas.[15]

In February 2014, PDVSA and the Anglo-French oil firm Perenco entered into talks for a $600 million financing deal to boost production at their Petrowarao joint venture.[16] In October 2014, Venezuela imported its first ever ship of oil from Algeria so that they could dilute their oil.[17]

Nationalization

Venezuela officially nationalized its oil industry on 1 January 1976, and along with it came the birth of PDVSA. See: History of the Venezuelan oil industry#Nationalization

Assets of ExxonMobil and ConocoPhillips were expropriated in 2007 after they declined to restructure their holdings in Venezuela to give PDVSA majority control,Total, Chevron, Statoil and BP agreed and retain minority interests in their Venezuelan projects.[18] Arriving at a settlement with ExxonMobil has proven difficult with Venezuela offering book value for ExxonMobil’s assets and ExxonMobil asking for as much as $12 billion. This and a number of other matters including the claims of ConocoPhillips remain before the World Bank’s International Centre for Settlement of Investment Disputes.[19] PDVSA has paid compensation for assets it has nationalized including $255 million paid to ExxonMobil on February 15, 2012 in compensation for nationalization of ExxonMobil’s Venezuelan assets in 2007 and $420 million to be paid beginning in 2012 to U.S. firms Williams Cos Inc. and Exterran Holdings, Inc. for natural gas assets nationalized in 2009.[20]

Safety

There have been worsening safety problems since 2003,[5] culminating in a gas leak at the Paraguaná Refinery Complex in August 2012 which caused an explosion, killing 48 people and damaging 1600 homes.[21] Another major fire broke out at the El Palito refinery in September 2012.[22]

Presidents of PDVSA

Overseas assets

The Citgo sign, as seen from Lansdowne St., Boston

  • Citgo Petroleum Corporation, USA – Citgo is 100% owned by PDVSA.
  • Nynäs Petroleum, Sweden – PDVSA owns a 50% stake with Finland’s Neste Oil Oyj holding the other 50%.
  • Bahamas Oil Refining Company (BORCO), Bahamas – PDVSA was the sole owner of this oil storage terminal in the Caribbean until April 2008. The new owners were Royal Vopak (20%) and First Reserve Corporation (80%). It is doing business as Vopak Terminal Bahamas. They in turn sold the facility to Buckeye Partners in 2011.
  • Hovensa LLC refinery, US Virgin Islands – Hovensa is jointly owned by PDVSA and Hess Oil Virgin Islands Corp.
  • Isla refinery, Curaçao – PDVSA leases the Isla refinery on the island.
  • BOPEC, Bonaire petroleum corporation 100% owned by PDVSA.
  • Ruhr Oel, Germany – PDVSA was a 50% owner of Ruhr Oel GmbH, the other half belonging to BP‘s German unit Aral AG. PDVSA sold its part to Russia’s Rosneft on October 2010.
  • PDVSA acquired a minority stake in the Jamaican state-owned oil refinery in 2006.

PDVSA also has offices in Argentina, Bolivia, Brazil, Colombia, China, Cuba, Spain and Netherlands.