PDVSA, Petrobras ink accords on marketing of oil products

State oil companies Petroleos de Venezuela SA and Petroleo Brasileiro SA have agreed in principle to undertake a joint effort to market Venezuelan oil products in northern Brazil. Two agreements were signed, defining the framework for joint projects in line with letters of intent signed in June 1999. Those letters defined areas of cooperation such as exploration and production, crude oil processing, asphalt production, and products marketing.


CARACAS�State oil companies Petroleos de Venezuela SA and Petroleo Brasileiro SA have agreed in principle to undertake a joint effort to market Venezuelan oil products in northern Brazil. The alliance will be handled through a joint-venture company.

Two agreements were signed, defining the framework for joint projects in line with letters of intent signed in June 1999. Those letters defined areas of cooperation including exploration and production, processing of Brazilian crude in PDVSA refineries, production of asphalt in Brazil, and sale of products through a network composed of service stations owned by both firms.

PDVSA Pres. Hector Ciavaldini and Petrobras head Philippe Reichstul signed the accords last Wednesday. The move is in concert with Venezuelan President Ch�z's much touted goal of Latin American integration.

Products supply
One of the accords envisions meeting growing demand for oil products in northern and northeastern Brazil with products supplied by Venezuela, PDVSA said. The second accord covers the distribution of fuels in the region through 600 service stations, 300 belonging to PDVSA and 300 to Petrobras.

Ciavaldini told reporters here the network could grow to 1,800 stations in "a short time."

PDVSA says the new joint venture company, the name of which will be defined in the coming months, will benefit from its experience in the operation of an extensive network of service stations operated by US subsidiary Citgo Petroleum Corp. The firms hope to secure about 10% of the market in the region, equivalent to about 180 million l./month in fuel sales.

The companies soon will evaluate potential associations for the revitalization of oil fields and for deepwater exploration off Venezuela, an area in which Petrobras's is knowledgeable. Reichstul said the firms expected to sign an additional agreement within 2 or 3 months to cover exploration and production projects in Venezuela.

In September, PDVSA and Petrobras will open business offices in Rio de Janeiro and Caracas, respectively, to begin activities related to the accords.

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