BMI's Executive Summary

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The latest Venezuela Oil & Gas Report forecasts that the country will account for 8.44% of Latin America regional oil demand by 2011, while providing 29.13% of supply. Latin America regional oil demand rose to an estimated 6.87mn barrels per day (b/d) last year. It should average 7.01mn b/d in 2007 and then rise to around 7.82mn b/d by 2011. Regional oil production was last year estimated at 10.97mn b/d. It is set to rise to 11.85mn b/d by 2011. In terms of natural gas, the region last year consumed an estimated 183bn cubic metres (bcm), with demand of 271bcm targeted for 2011, for 48% growth.

Production of an estimated 191bcm in 2006 should reach 272bcm in 2011, implying just 2bcm of net exports the end of the period. Venezuela contributed around 17.49% to 2006 regional gas consumption, while producing an estimated 16.75%. By 2011, it is expected to consume 16.24% of the region's gas, while contributing 17.65% to supply.

For the whole of last year, our estimates of average crude oil prices are US$61.10 for the OPEC basket, US$65.10 for Brent, US$66.20/bbl for WTI and US$61.30 for Urals. For the first quarter of this year, we have adjusted our forecasts to reflect the weather-induced volatility. The OPEC basket is now expected to have averaged US$54.30/bbl, with Brent at US$57.60; WTI averaging US$58.70 and Urals at US$54.00/bbl. Our projections for 2007 as a whole are barely changed from the last quarterly report.

We are still assuming an OPEC basket price average of US$55 per barrel. Based on last year's typical price differentials, this implies Brent at US$58.80, WTI averaging US$59.90/bbl, and Urals at US$55.30/bbl.

Venezuelan real GDP growth is forecast by BMI at 3.5% for 2007, down from an estimated 10.3% in 2006. We are assuming 3.2% growth in 2008, followed by 3.0% in 2009-11. State-owned PdVSA works in co-operation with numerous international oil company (IOC) partners in conventional and heavy oil projects. While recent changes in taxation and the licensing system may reduce foreign involvement, most key players appear committed to the country.

We are assuming oil and gas liquids production of no more than 3.45mn b/d by 2011, with the country expected to pump 3.00mn b/d this year. Consumption is forecast to increase by around 3% per annum to 2011, implying demand of 660,000b/d by the end of the forecast period. The export capability would therefore be approximately 2.79mn b/d by 2011. Gas production is forecast to increase from last year's estimated 31.5bcm to 48bcm over the period, matched by consumption.

In the BMI Business Environment Ranking matrix, Venezuela receives an unchanged composite score of 26, ranking it in country outright seventh out of nine states included in the region. The overall business environment can be considered unattractive in a regional context, thanks largely to the country's perceived high levels of economic and political risk, plus the demanding licensing and production sharing regime. However, the country has considerable untapped hydrocarbons potential, with a high reserves-toproduction ratio (RPR), significant output growth potential and an established competitive framework.

Numerous IOCs are active in the upstream segment, but some have been re-assessing their exposure to Venezuela.

Contents

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Chapter 1 - Executive Brief

Chapter 2 - SWOT Analysis

Venezuela Economic SWOT

Venezuela Political SWOT

Venezuela Business Environment SWOT

Chapter 3 - Regional Market Overview

Latin America Region

Venezuela

Chapter 4 - Business Environment Rankings

Venezuela

Latin America Region

Chapter 5 - Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Chapter 6 - Business Environment Overview

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Foreign Direct Investment

Tax Regime

Chapter 7 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 8 - Regional Supply and Demand

Latin America

Table: Oil Production (000b/d) – Latin America

Table: Oil Consumption (000b/d) – Latin America

Chapter 9 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 10 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

LNG

Refining and Oil Products Trade

Revenues/Import Costs

Table Venezuela Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Venezuela Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 11 - Economic Outlook

Table: Economic Activity Indicators

Chapter 12 - Regional Case Study

Investment Needed To Fulfil Venezuelan Potential

Strategic Vision

Export Commitments

Regional Position

Chapter 13 - Competitive Landscape

Executive Summary

Table: Key Players: Venezuela Oil & Gas Sector

Overview/State Role

Chevron – Summary

Total – Summary

BP – Summary

ConocoPhillips – Summary

Table: Key Upstream Players

RepsolYPF – Summary

ExxonMobil – Summary

OMV – Summary

Statoil – Summary

Table: Key Downstream Players

Eni – Summary

Petrobras – Summary

PetroCanada – Summary

Shell – Summary

Perenco – Summary

Chapter 14 - Company Monitor

PdVSA

Chevron

SWOT Analysis

Conoco Venezuela

Company Analysis

Total Venezuela

Company Analysis

SWOT Analysis

RepsolYPF Venezuela

Company Analysis

SWOT Analysis

Chapter 15 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Energy Industry

Cross checks

Sources

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of Latin American Oil & Gas Sources

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BMI's Latin American Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil & gas industry associations, chambers of commerce and company reports. Information sources include: