Venezuela, India sign joint venture in oil-gas-rich Orinoco

Venezuela, India sign joint venture in oil-gas-rich Orinoco
AFP - Wednesday, April 9 12:01 am

CARACAS (AFP) - Venezuela and India on Tuesday signed a five-year, 400-million-dollar joint venture to drill for oil and gas in Venezuela's oil-rich southeastern Orinoco region, Oil and Energy Minister Rafael Ramirez said.

"It's the first association agreement between the two countries," Ramirez said after signing the agreement with his Indian counterpart Murli Deora, the first energy minister from India to visit Venezuela.

The joint venture brings together Venezuela's state-owned oil company PDVSA and India's ONGC Videsh Ltd., a subidiary of India's top oil company Oil and Natural Gas Corporation Ltd (ONGC).

With PDVSA controlling a 60 percent stake of the venture and ONGC Videsh Ltd. 40 percent, the two companies will explore the 160 square kilometer (62 square miles) San Cristobal oil field in northern Orinoco, a region the size of Croatia that is rich in heavy crude oil.

Over the next few years, the joint venture is likely to double Orinoco's oil production from its current 30,000 barrels per day to 60,000, Ramirez told reporters at PDVSA heaquarters.

Preliminary studies by both companies also estimated the San Cristobal area can yield 7,476 cubic meters (264 million cubic feet) of natural gas.

India in 2006 increased its crude oil purchase to 50,000 barrels per day, and its trade with Venezuela has grown from 60 million dollars per year in 2004 to 138 million in 2005, and close to one billion in 2006, mostly in oil sales, the Indian Embassy said.

Venezuela, a member of the Organization of Petroleum Exporting Countries (OPEC), is Latin America's leading oil producer, with an estimated 100 billion barrels of crude oil reserves.

Last year, the leftist government of President Hugo Chavez nationalized the Orinoco oil fields, imposing a 60 percent share for PDVSA in all joint ventures in the area, and compensating some foreign oil companies for their lost interest.

Besides India, PDVSA is currently working with oil companies from Russia, Iran, China and Latin American nations in exploiting the heavy Orinoco crude, which is expensive to refine.

When fully tapped, Orinoco's estimated 270 billion dollars of crude oil reserves would make Venezuela at the world's top oil producer, beating current leader Saudi Arabia.