Venezuela approves creation of Orinoco joint ventures

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 16 -- Venezuela’s National Assembly has approved the creation of two joint ventures between state-owned Petroleos de Venezuela SA and two consortia of international oil companies for the development of projects in the Orinoco heavy oil belt.

The first JV gives PDVSA a 60% share of the Carabobo 1 project, with the remaining 40% divided among Repsol, Indoil, and Petronas. The second JV, Carabobo 3, also is led by PDVSA with 60%; the remaining 40% is shared among Chevron, Inpex, Mitsibushi, and Suelopetrol.

Each of the two projects, which are to produce 400,000 b/d of oil, include the construction of a heavy crude upgrader that can turn 200,000 b/d of tar-like Orinoco oil into synthetic crude, while the remaining 200,000 b/d of Orinoco oil will be blended to produce an intermediate grade.

“The approval of the contracts by the National Assembly is essentially a formality,” said analyst IHS Global Insight. “Nonetheless, it is still a significant development as these two projects alone are expected to generate $30-billion-worth of investment and raise production by 880,000-960,000 b/d.”

Last week, the National Assembly also ratified an agreement to establish an oil production joint venture, called Petromiranda, that was signed on Apr. 2 by PDVSA (60%) and Russia's National Oil Consortium (40%).

Russia’s NOC was created to conduct operations of Russian oil and gas companies in Venezuela, and its members include Rosneft, Gazprom, Lukoil, Surgutneftegas, and TNK-BP, each with a 20% stake.

According to earlier reports, the Petromiranda JV will focus on developing the Junin-6 oil block, which has estimated reserves of 500 billion bbl of oil. Production from the block is expected to reach 450,000 b/d of heavy oil by 2017.

Commenting on the approvals by legislators, Venezuela’s energy and oil minister Rafael Ramirez said the Orinoco oil belt will attract investment of more than $120 billion over the next 7 years.

The $120 billion in investment will enabling Venezuela to produce 3 million b/d of crude oil in the Orinoco oil belt alone, said Ramirez, who added that his country already had certified oil reserves of 170 billion bbl in the belt and plans to certify a further 108 billion bbl.

Ramirez also said the Venezuelan government will continue to select partners for development of the Orinoco belt based on two approaches: public tenders and intergovernmental accords as in the case of Russian, Chinese, Belorussian, and Cuban oil firms.

Earlier this week, Japan’s government-backed Japan Oil, Gas & Metals National Corp. said it will invest up to ¥32 billion by yearend 2017 in an extra-heavy Orinoco crude oil project in Venezuela, in which two Japanese companies are involved (OGJ Online, Apr. 13, 2010).

Contact Eric Watkins at

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