Oil PSUs sign JV pact for Venezuela project

Union Minister of Petroleum and Natural Gas, Murli Deora, along with S. Sundareshan, Secretary Petroleum; Chairman Indian Oil Corp; Chairman & Managing Director, Oil India; Managing Director, ONGC Videsh Ltd. and other senior officials from the Ministry of Petroleum and Natural Gas participated in the signing ceremony presided by the President of the Bolivarian Republic of Venezuela, Hugo Chavez Frias for signing a joint venture agreement with the Corporación Venezolana del Petróleo S.A. (CVP) for the development and production from Carabobo-1 Project, in Orinoco Region of Venezuela. The signing took place in Caracas, the capital city of Venezuela, late Thursday night (India time). The new joint venture is PetroCarabobo S.A. Along with OVL, IOC and OIL, the other two partners of the consortium i.e. Spanish Major Repsol and Malaysian Petronas also signed the joint venture agreement.

The consortium of OVL (11%), Indian Oil (3.5%), Oil India (3.5%), Repsol YPF (11%) and Petroliam Nasional Berhad (11%), was selected by the Government of the Bolivarian Republic of Venezuela on February 10 for awarding a 40% ownership interest in an "Empresa Mixta" (or "Mixed Company") which will develop the Carabobo 1 Norte and Carabobo 1 Centro blocks located in the Orinoco Heavy Oil Belt. The Corporación Venezolana del Petróleo (CVP), a subsidiary of Petróleos de Venezuela S.A. (PDVSA), Venezuela's state oil company, will hold the remaining 60% equity interest.

The Mixed Company will build heavy oil production facilities, upgrading facilities and associated infrastructure. The upstream production facilities are expected to produce around 400,000 barrels per day of extra heavy oil of which approximately 200,000 barrels per day will be upgraded into light crude oil in a facility to be located in the Soledad area, Anzoátegui State. The license term will be for 25 years with the potential for a further 15 year extension. The project costs are estimated at US$15-20bn and is one of India’s major investments in the Latin American oil major.