UPDATE:Russia,Venezuela In Deal On Oil Production Joint Venture
February 01 2010 - 3:53PM
Dow Jones News
Venezuela inked a deal with Russia to develop an extra-heavy oil
block in the eastern Orinoco region that could eventually produce
450,000 barrels a day, state-run Petroleos de Venezuela, or PDVSA,
said in a statement Monday.
The 448-square-kilometer Junin 6 block, with some 53 billion
barrels of reserves, will require $18 billion in investments and
peak production will be reached around 2017, the PDVSA statement
said.
The Venezuela-led project will see PDVSA in control of 60% of
the joint venture, with a consortium of Russian firms holding the
remaining 40%. The members of the consortium are Rosneft (ROSN.RS),
OAO Gazprom (GAZP.RS, OGZPY), Lukoil Holdings (LKOH.RS, LUKOY),
Surgutneftegas (SNGS.RS), and TNK-BP Holding (TNBP.RS), PDVSA
said.
"This is the beginning of an important joint project, one I'm
certain will pay dividends to our Venezuelan colleagues and their
Russian partners," Russian Prime Minister Vladimir Putin said
Monday, according to the PDVSA statement.
Russia's Prime-Tass news agency reported the deal earlier
Monday.
PDVSA said the Russians will have to pay a $1 billion signing
bonus to the Venezuelan government to participate in the
project.
The deal, signed in Moscow, comes days after Venezuela signed a
similar deal with Italy's ENI SpA (ENI.MI, E) to develop the
neighboring Junin 5 block.
The Junin 5 project is also an $18 billion deal, though peak
production there is expected to be much less, at around 240,000
barrels a day by 2106.
The Junin projects with the Russians and the Italians are
separate from Venezuela's Carabobo auction, in which the South
American country will award to the most attractive bidders seven
promising blocks that are split into three areas.
The Carabobo blocks are also in the Orinoco region.
Bids were received on the Carabobo project last week by one
consortium that includes Chevron Corp. (CVX), and another
consortium that includes Spain's Repsol YPF SA (REP, REP.MC),
India's Oil and Natural Gas Corp. (500312.BY) and Malaysia's
Petroliam Nasional Bhd., or Petronas.
Results of the auction are expected to be announced Feb. 10.
-Dan Molinski, Dow Jones Newswires; 58-414-120-5738;
dan.molinski@dowjones.com
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