Venezuela Projects 4.6 Million BPD of Production from Orinoco Belt - Latin American Herald Tribune

Venezuela Projects 4.6 Million BPD of Production from Orinoco Belt
PDVSA's head Rafael Ramirez said that level of output will be reached in 2020 thanks to “an accelerated development plan” that includes plans to invest a total of some $80 billion in a series of oil blocks

CARACAS – State oil company Petroleos de Venezuela SA and its joint-venture partners will eventually extract 4.6 million barrels of oil per day from the Orinoco Belt, the head of PDVSA said.

Rafael Ramirez, who is also Venezuela’s energy minister, said that level of output will be reached in 2020 thanks to “an accelerated development plan” that includes plans to invest a total of some $80 billion in a series of oil blocks.

The Orinoco Belt is a 55,000-sq.-kilometer (21,235 sq.-mile) area of northeastern Venezuela that contains some 234 billion barrels of heavy and extra-heavy crude, according to the Venezuelan government’s preliminary estimates.

PDVSA and its operating partners in Orinoco currently produce some 600,000 bpd, according to official Venezuelan figures.

Ramirez noted that multi-national oil firms from China, Vietnam, Italy, Spain, the United States and Russia, among other countries, thus far have agreed to form joint ventures – with PDVSA holding at least a 60 percent stake – to develop two areas of the Orinoco Belt, Junin and Carabobo.

No blocks have yet been awarded in two other Orinoco areas, Boyaca and Ayacucho.

Four joint ventures have been formed to develop an equal number of blocks in the Junin area, with the foreign firms paying a combined $2.23 billion in “entry bonuses,” Ramirez said, adding that total production from those blocks is projected to reach 1.29 million bpd.

In the Carabobo area, “two joint ventures (have been created) to extract 800,000 bpd,” while $1.55 billion in entry bonuses have been paid and $2.05 billion in financing provided to PDVSA, Ramirez said.

He added that joint ventures will be formed in the near future to develop the Carabobo 1 and Carabobo 3 blocks and that PDVSA’s partners will pay out $1.05 billion and $500 million, respectively, for their participation.

U.S. oil major Chevron, Spain’s Repsol, Russia’s Gazprom and Lukoil, China’s CNPC, Italy’s Eni and Japan’s Mitsubishi are some of the companies that have formed joint ventures with PDVSA to develop Orinoco blocks.

The U.S. Geological Survey said earlier this year that the Orinoco Belt holds an estimated 513 billion barrels of technically recoverable heavy oil, or almost double the Venezuelan government’s current estimate.

The USGS, which said the Orinoco belt was the largest oil accumulation it had ever assessed, noted that the oil in that region is very thick and does not flow easily but added that through the use of specialized production and refining processes a wide range of petroleum products can be generated.

Part of the money invested in Orinoco will be spent on upgraders to turn the heavy oil into lighter, higher-quality crude.

Venezuela, which currently produces 3.1 million bpd, most from other areas of the country, is the world’s fifth-leading oil exporter and – despite its leftist government’s poor relations with Washington – one of the leading suppliers of crude to the United States.

Latin American Herald Tribune - Venezuela Projects 4.6 Million BPD of Production from Orinoco Belt

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Venezuela says China offers $20 billion in financing | Reuters

Venezuela says China offers $20 billion in financing

10:32pm EDT

CARACAS (Reuters) - Venezuelan President Hugo Chavez said on Saturday that China was providing his nation with a long-term, $20 billion financing plan for major projects in the South American oil-exporter.

"China is going to give financing to Venezuela, to the Venezuelan people, to the Bolivarian Revolution ... over the long-term and in large volume of some $20 billion," Chavez said at a signing ceremony in Caracas.

The Venezuelan leader said the deal was on top of an existing $12 billion Chinese-Venezuelan investment fund in which Beijing deposits money in return for forward sales of oil.

He did not specify what areas the financing were for but China is increasingly involved in Venezuela's oil, electricity, food, construction and technology sectors.

Chavez had been due to host President Hu Jintao this weekend but the Chinese leader cut short his Latin American visit due to an earthquake at home.

As well as signing the financing agreement, Chavez and Chinese officials penned another six accords covering electricity and oil projects, including ratification of a joint venture to develop a block in the Orinoco crude belt.

The Junin 4 block is expected to require about $16 billion investment over three years and eventually produce more than 400,000 barrels per day.

(Reporting by Eyanir Chinea; Writing by Andrew Cawthorne; Editing by Bill Trott)

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Venezuela says China offers $20 billion in financing
| Reuters

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Venezuela Oil Minister Makes Rare US Visit, Defends Policies

Venezuela Oil Minister Makes Rare US Visit, Defends Policies (Copyright © 2010 Energy Intelligence Group, Inc.) International Oil Daily Monday, April 19, 2010

In a rare visit to Washington, Venezuelan oil minister Rafael Ramirez on Friday defended his country's foreign investment climate for heavy oil development and lamented that US leaders appear to be "badly informed" about Venezuela's energy policies.

Ramirez -- who is also president of state oil firm Petroleos de Venezuelas (PDV) -- said his country is open to working with any foreign investors to develop resources within the country's Orinoco heavy oil belt. He was addressing reporters at the headquarters of the Organization for American States.

The only two firms Venezuela has clashed with are Exxon Mobil and ConocoPhillips, he added, arguing that the two US majors were unwilling to respect Venezuela's sovereignty over its hydrocarbon resources. Exxon and Conoco chose to exit heavy oil operations in Venezuela in 2006 after the government unilaterally changed their contracts to give PDV a majority stake in their projects.

"No one can exclude Venezuela from energy discussions," Ramirez said, because Venezuela has the largest proven oil reserves in the western hemisphere. "We just ask that they respect our sovereignty, our laws and our social programs," he added.

Unable to shoulder the costs of heavy oil development alone, Venezuela made some minor concessions to oil companies to improve the fiscal terms and encourage foreign investment in the Orinoco region. But it restricted foreign firms to holding minority stakes in heavy oil projects.

Ramirez said the primary purpose of his trip to Washington was to increase awareness of Venezuela's energy policies at the "Energy and Climate Partnership for the Americas" summit last week. Many observers were surprised at Venezuela's attendance.

"We are not going to sign any agreement. We are not going to sign any partnership. We are here to inform the US about what we have been doing," Ramirez told reporters.

Venezuela is the fourth largest foreign supplier of crude to the US, but political disagreements have added a new layer of strain to US-Venezuela relations in recent years.

US politicians have blamed Venezuelan President Hugo Chavez for the discord, which arguably reached its peak when Chavez compared former President George W. Bush to a demon at an international gathering several years ago.

In a statement distributed to reporters, the Venezuelan embassy said Ramirez's attendance at the summit marks a new phase in US-Venezuela relations.

"It is his first visit to the city since 2004, when the Bush Administration, due to political reasons, began limiting communications between the energy institutions of the two countries and eventually put on hold the energy agreement that had been active between the two countries since the 1980s," the embassy said.

Ramirez drew attention to the fact that US major Chevron was part of one consortium that recently bid for acreage in the Carabobo area in the eastern part of the Orinoco region.

Aside from highlighting Chevron's involvement in Venezuela, Ramirez pointed out the efforts of PDV's US refining subsidiary Citgo, which has supplied heating oil at low cost to low-income Americans.

However, Ramirez said he thinks some Bush-era resentments toward Venezuela still linger.

US state department officials claim that they have tried to reach out to Venezuela, but that senior Venezuelan officials have not been responsive.

"In the US we still find people linked to the prior administration -- and this has created a situation where even people who are genuinely interested in working with us are badly informed," Ramirez added. "So we have been talking about how Venezuela has been diversifying our energy markets, to give authorities first-hand information from us."

Lauren O'Neil, Washington

(Copyright © 2001-2010 Energy Intelligence Group, Inc. / Energy Intelligence Group (UK) Limited)

Venezuela Oil Minister Makes Rare US Visit, Defends Policies

Rosneft seeks Venezuelan assets in Germany-sources | Reuters

Rosneft seeks Venezuelan assets in Germany-sources

Thu, Apr 1 2010

* Rosneft eyes PDVSA's 50 pct in Ruhr Oil, a JV with BP

* Deal could be Rosneft's first big overseas acquisition

* Kremlin encourages its giant firms to expand abroad

(Adds details, quotes, background)

By Dmitry Zhdannikov

MOSCOW, April 1 (Reuters) - Russian oil major Rosneft is seeking to buy stakes in four German refineries from Venezuela as part of a Kremlin drive to encourage its firms to own assets all over the world, industry sources told Reuters.

The deal, in which Rosneft could buy Venezuelan state firm PDVSA's 50 percent stake in the Ruhr Oil refinery venture with BP , may be discussed on the fringes of Russian Prime Minister Vladimir Putin's visit to Venezuela on Friday. [ID:nLDE62U1QC]

The bid comes as Rosneft, alongside other Russian firms, is preparing to pay Venezuela $600 million in bonuses and invest a further $10-$20 billion over the next few decades to help the country develop its giant Orinoco oil province.

"It would make sense to do it as a big, package deal," one industry source told Reuters, referring to a growing number of energy and arms deals between Moscow and Caracas.

Rosneft, BP and Putin's spokesman, Dmitry Peskov, declined to comment. PDVSA was not immediately available for comment.

PDVSA says Ruhr Oil is the biggest company refining oil products in Germany, with daily capacity of 1 million barrels, of which around 250,000 bpd belong to PDVSA. Rosneft has seven plants in Russia with total capacity of around 1 million bpd.

Rosneft would not be the first Russian firm to attempt to persuade PDVSA to sell the assets, located thousands of miles from its oil production units.

Earlier this decade BP's Russian venture, TNK-BP, expressed interest in buying the assets, known as Ruhr Oil -- a 50/50 venture between BP and PDVSA, which has interests in four German refineries, Gelsenkirchen, Miro, Bayern Oil and Schwedt.

But BP, which has the first right of refusal on the assets, at that time did not welcome the idea, which would make its four Russia-connected billionaire partners in TNK-BP co-owners of assets in Germany, industry sources said at the time.

"TNK-BP had estimated the value of a 50 percent stake in Ruhr Oil at approximately $1 billion prior to the crisis," an investment banking source told Reuters.

BP and Rosneft, already partners in a number of oil exploration projects on Russia's eastern island of Sakhalin, have begun preliminary discussions about Ruhr Oil, sources said.

BP has had a bumpy experience in Russia, as it was forced to surrender management control in TNK-BP to its billionaire partners after months of corporate wars.

The venture is now trying to secure recompense from the Russian state for the likely loss of its licence for the giant Kovykta gas field in eastern Siberia, which Russian authorities have long threatened to withdraw. [ID:nLDE62M1C6] (Editing by Anthony Barker)

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Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

UPDATE 1-Rosneft seeks Venezuelan assets in Germany-sources
| Reuters



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