OGJ Oil Diplomacy Editor
LOS ANGELES, Nov. 23 -- Venezuela’s state-owned Petroleos de Venezuela SA and Italy's Eni SPA have agreed to invest $17 billion in two separate joint venture projects aimed at producing and refining from the Latin American nation's Orinoco belt.
Venezuela’s Minister of Energy Rafael Ramírez and Eni Chief Executive Officer Paolo Scaroni signed the agreements for PetroJunin, which will develop Junin 5 block, and for PetroBicentenario, which will build and operate a refinery in the area of the existing industrial coastal complex of Jose.
The 50,000 sq km Orinoco belt contains some 280 billion bbl of heavy and extra-heavy crude, according to PDVSA estimates, while the US Geological Survey said in January that the area holds an estimated 513 billion bbl of technically recoverable heavy oil.
The firms said that Junin 5 block alone has 35 billion bbl of oil in place with recoverable reserves estimated in excess of 2.5 billion bbl. Eni’s share of the reserves is more than 1 billion bbl, and its share of production will be close to 100,000 b/d at full field development.
The two firms said they plan to achieve an early production phase of 75,000 b/d with first oil expected by 2013 and a long-term production plateau of 240,000 b/d by 2018. They said that 1,500 horizontal shallow wells will be required for the full field development.
Their refinery, to be built in the Jose Industrial Complex, will have a capacity of 240,000 b/d along with the ability to process additional volumes of 110,000 b/d of intermediate streams from other PDVSA facilities.
Ramirez underlined the importance of the PetroBicentario project for his country, saying that, “This refinery will also represent the first time—an all-new scheme—where the feedstock from the Orinoco will be upgraded and then refined, so that we will not be exporting upgraded crude, but refined products.”
Investment will reach $8 billion for PetroJunin and $9 billion for PetroBicentenario. PDVSA will own a 60% stake in the two companies, while Eni, which said it paid a $646 million bonus, will hold the remaining 40% in each firm.
In Venezuela, Eni already is present in Petrosucre, which operates the offshore Corocoro field (PDVSA 74%, Eni 26%) with a production of 10,000 b/d of oil.
Eni also is co-operator with a 50% stake in the offshore Cardon IV license where the giant Perla gas field was discovered in October 2009. Perla has an estimated gas in place in excess of 14 tcf of gas.
At this week’s signing ceremony in Caracas, Scaroni said the oil and gas projects together mean that Venezuela "is going to be a truly strategic country” for his firm’s development.
Indeed, said Scaroni, "Within 4-5 years, Venezuela is going to be the second-most important country for our company.”
Contact Eric Watkins at email@example.com.