Conoco Inc. and the Maraven unit of Petroleos de Venezuela SA (Pdvsa) have signed a final agreement to form a joint venture to develop and market extra heavy crude from Venezuela's Orinoco region.
Petrozuata, owned 50-50 by Conoco and Maraven, will conduct a $1.4 billion, 35 year campaign to produce 1.5 billion bbl of Orinoco crude and upgrade it for export.
If plans proceed as expected, shipments of syncrude derived from Orinoco feedstock could begin arriving in the U.S. about the turn of the century.
Petrozuata plans to:
- Produce Orinoco oil from a 55,000 acre site in the Zuata region of Central Venezuela.
- Transport the oil 130 miles to a $1 billion upgrading plant to be built at Jose on Venezuela's coast.
- Upgrade as much as 120,000 b/d of Orinoco crude with Conoco delayed coking technology to yield as much as 104,000 b/d of syncrude.
- Export most of the syncrude to Conoco's 191,000 b/cd Lake Charles, La., refinery and sell the rest to other refiners.
Partners plan to begin building the Jose upgrading plant in 1997 and expect to complete construction in 2000. Petrozuata also will lay a crude oil pipeline between Zuata and Jose. Drilling of wells for the project is to begin in 1997.
NEW ERA
Conoco Pres. and Chief Executive Officer Constantine S. Nicandros said the project's $1.4 billion price tag makes the joint development the biggest business deal in Venezuela involving talks with a foreign company since nationalization of the country's industries in 1975. He said the agreement signals the beginning of a new era of multinational investment in Venezuela's oil and gas industry.
Maraven Pres. Emilio Abouhamad said the project also will open a new oil frontier for Venezuela: "Our relationship with Conoco opens the opportunity for additional collaboration and represents a big step in the direction of Pdvsa's new policy."
Conoco and Maraven began studying the feasibility of the project in 1991. Following completion of a joint study, the companies submitted the project plan in late 1992 to Venezuela's Congress.
Venezuelan legislators in mid-August gave approval for Maraven and Conoco to form the joint venture.
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