--Orinoco's Junin 6 bloc expected to produce 50,000 barrels per
day, has potential for 450,000 barrels per day
--President Chavez says project is latest example of
strengthening ties with Russia
--Chavez proposes creating new oil alliance, says won't conflict
with OPEC
(Adds details on production in third paragraph; details on
ownership in fourth paragraph; and Chavez comments on oil alliance
proposal in seventh and eighth paragraphs.)
SAN DIEGO DE CABRUTICAS, Venezuela (Dow Jones)--A joint venture
between state oil company Petroleos de Venezuela and a consortium
of Russian companies is expected to begin producing crude in the
Orinoco heavy oil belt by May, officials said Thursday.
"The physical work has begun," said Igor Sechin, deputy prime
minister of Russia, during a tour of the oil fields with Venezuelan
Oil Minister Rafael Ramirez.
Eventually, 34 wells will be drilled at the Orinoco's Junin 6
bloc, which is slated to begin producing 50,000 barrels of crude by
next year. "It's one of the biggest fields we have," Ramirez told
reporters, adding that it has potential for 450,000 barrels per
day.
The Junin 6 bloc is 60% owned by PdVSA, as the state energy
monopoly is known, while the Russian consortium made up of OAO
Rosneft (ROSN.RS), Surgutneftegaz JSC (SGTZY), TNK-BP Holdings
(TNBP.RS), Lukoil Holdings (LUKOY) and Gazprom Neft (GZPFY) holds
the remaining 40%.
Venezuela is pushing foreign oil partners to increase investment
into developing its crown jewel Orinoco belt in a bid to raise the
country's crude production levels to 4 million barrels a day by
2014, up from just under 3 million presently. Some analysts say
President Hugo Chavez's government, which relies heavily on oil
revenue to fund large social programs, is aiming to increase
production to safeguard against a potential drop in the price of
the commodity.
Speaking on state television, Chavez said the project is the
latest example of strengthening ties with Russia as the socialist
leader looks to move away from his ideological foe, the U.S.
Chavez also briefly proposed creating a new organization that
would protect the interests of large oil exporters, but said it
wouldn't conflict with the Organization of Petroleum Exporting
Countries, of which Venezuela is a founding member.
"The thought occurred to me of how we could create a new
organization of this new world that is emerging of the oil giants.
There aren't too many oil giants in the world, maybe four or five,
and Venezuela and Russia are two of them," the president said.
While Venezuela's Orinoco region holds one of the largest and
mostly untapped deposits of crude in the world, billions of dollars
will have to be poured into converting the region's tar-like heavy
oil into a usable and exportable commodity. The South American
country aims to bring in $80 billion in investment over the next
several years to develop the fields.
At an oil conference in Venezuela last week, officials from
various energy companies stressed that financing the large-scale
production projects may still prove challenging along with bringing
the required technology into the country's vastly underdeveloped
eastern regions.
-By Ezequiel Minaya, Dow Jones Newswires; 58-414-120-5738;
ezequiel.minaya@dowjones.com
--Kejal Vyas contributed to this article.