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Petroleum

Lagoven's Restructuring and Upstream Activities in Pre-PDVSA E&P Era

Strategic Insights

— 2 min read

Lagoven, Venezuela's largest oil producer and refiner, underwent significant restructuring in the mid-1990s, reshaping its international marketing and supply division to improve trading opportunities and eliminate bureaucracy. The company established four separate business units, each operating as a profit center, to market and sell crude oil, distillates, bunkers, and asphalt. Lagoven's production base spanned various regions, including the Maracaibo Basin, where it had made significant discoveries and operated large oil fields.

Key Takeaways:

  • Lagoven was created in January 1976 as a national evolution of Exxon, following the nationalization of Exxon's local assets.
  • In 1978, Lagoven took over the local assets of Amoco from Amoven, retaining the "Exxon culture" in marketing and Amoco's orientations in the upstream industry.
  • Lagoven reorganized its international marketing and supply division in mid-1994 to eliminate bureaucracy and improve trading opportunities, establishing four separate business units as profit centers.
  • The company operated significant oil fields in the Maracaibo Basin, including Mesa/El Furrial, Tia Juana, and Boqueron, producing high volumes of gas-rich oil.
  • Lagoven's Mesa/El Furrial field had a production capacity of 330,000 b/d of gas-rich Mesa crude oil, which was one of Latin America's most actively traded crudes on the spot market.
  • The company discovered light oil deep beneath its Bachaquero field in late 1994 and produced 4,300 b/d of 37 deg. API oil from a formation at a depth of 13,900 ft.
  • Lagoven launched three projects to exploit at least 1 BCF of gas in the Orinoco Belt, including a gas extraction system, a thermal power plant, and a gas liquids plant.
  • The company's LPG production averaged over 60,000 b/d in late 1997, which was later increased to about 86,000 b/d by early 1999 after an expansion of Lagoven's Acogas project in Monagas state.
  • Lagoven planned to develop four offshore gas fields for LNG export on the Gulf of Paria, with a total recoverable reserve of 12 TCF (340 BCM) required for the 6m t/y project.
  • The company had over 16 TCF of recoverable gas in its planned development fields, with nearly 10 TCF already proven.

Statistics:

  • 330,000 b/d: Mesa/El Furrial field's production capacity of gas-rich Mesa crude oil in 1997
  • 400,000 b/d: Expanded production capacity of Mesa/El Furrial field
  • $165m: Loan provided by the US Overseas Private Investment Corp. (OPIC) to WilPro Energy Services to develop the Mesa/El Furrial field in October 1997
  • 4,300 b/d: Initial output from Lagoven's BA-2140X wildcat well in the Bachaquero field in late 1994
  • 96%: Increase in gas recovery rate in Lake Maracaibo operations after the commissioning of seven new compressor stations by 1994
  • 3.6 BCF/day: Total gas production capacity in Lake Maracaibo by 1994
  • 600,000 b/d: Oil production rate in Maracaibo, with 80% contributed by gas reinjection
  • 1 BCF: Minimum recoverable gas reserves required for each of Lagoven's three projects in the Orinoco Belt
  • 6m t/y: Proposed LNG production capacity of the Sucre Gas project
  • 12 TCF (340 BCM): Minimum recoverable reserves required for the Sucre Gas project
  • 16 TCF: Estimated recoverable gas reserves in Lagoven's planned development fields
  • 10 TCF: Recoverable gas reserves already proven in Lagoven's planned development fields
  • 60,000 b/d: Average LPG production in late 1997
  • 86,000 b/d: Increased LPG production after an expansion of Lagoven's Acogas project in Monagas state by early 1999

Sources:

  • (see DT)
  • (Part 3)
  • (Part 4)
  • Lagoven's company reports and restructuring documents from 1994 and 1997.

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