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Chevron, Venezuelan Firm Consider Venture

Petrochemicals: Under the $1.5-billion alliance, they would produce aromatics, used in making plastics, solvents and drugs.

January 08, 1999| From Bloomberg News

Chevron Corp., the fourth-largest U.S. oil company, and Petroleos de Venezuela are in talks regarding a $1.5-billion venture to manufacture aromatics--the building blocks of plastics, solvents and pharmaceuticals.

If San Francisco-based Chevron and PDVSA unit Proesca decide to go ahead, the venture could begin production in 2002, a PDVSA spokesman said. Production would be about 1.3 million tons a year of aromatics, including benzene and xylene.

"The plant would use the byproducts of PDVSA's refineries in the Paraguana peninsula," said the spokesman. He gave no indication when a decision would be made whether to go ahead with the plant, which would be near the refineries.

Venezuela, through state petrochemical company Pequiven, is in the midst of an $8.3-billion program to become a key petrochemical exporter. Pequiven projects--excluding Proesca's programs--aim to triple annual production of petrochemicals, including plastics and fertilizers, to 21 million tons by 2007.

"Plans are still in their very early stages," said a Chevron spokeswoman in Caracas. "They only consist of studies at this time."

Chevron is the second U.S. oil company studying Venezuelan petrochemical projects. Mobil Corp. is in the midst of a $2.25-billion plastics venture with Pequiven. That plant is also due to go on line in 2002.

Proesca was created in 1995 by PDVSA to promote ventures using byproducts from the country's refineries. Proesca has already inked three ventures.

Chevron already has a large Venezuelan presence. The company is managing two oil fields for PDVSA under that company's marginal field program.

Under terms of the program, Chevron is being paid a per-barrel fee to produce oil from the fields. The company operates the Boscan field, where production is 103,000 barrels a day. Chevron--together with Atlantic Richfield Corp., Statoil and Phillips Petroleum--also is managing the LL-652 field, which is in Lake Maracaibo in the northwestern state of Zulia.

Chevron earlier said production at LL-652, now 8,400 barrels a day, could rise to 115,000 barrels by 2007.

Chevron shares rose 63 cents to close at $83.88 on the New York Stock Exchange.

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