Venezuela signs oil agreements worth up to 40 billion dlrs

13th May 2010, Comments 0 comments

President Hugo Chavez's socialist government signed agreements Wednesday with US oil giant Chevron and Spain's Repsol worth up to 40 billion dollars to develop reserves in the oil-rich Orinoco Belt region.

Under new investment rules approved in 2007, the state-run Petroleos de Venezuela (PDVSA) holds at minimum a 60 percent stake in each Orinoco project.

Chevron, which heads a group of companies that includes Impex and Mitsubishi of Japan and Venezuela's Suelopetrol, will be operating in Carabobo Bloc Three, officials said.

Repsol, which heads a group that includes the Malaysian oil company Petronas and the Indian companies ONGC, Indian Oil and Oil India, have been assigned the Carabobo Bloc One.

Their investment will be "between 15 and 20 billion (dollars) per project, and production will range in each bloc from 400,000 and 480,000 barrels a day," said Energy and Oil Minister Rafael Ramirez, who is also head of PDVSA.

For years experts believed that it was too expensive to extract and refine the heavy and extra-heavy oil in the Orinoco Belt, a 55,314 square kilometer (21,360 square mile) region around the Orinoco River.

But the drop in light oil reserves and the increase in global oil prices -- currently around 75 dollars a barrel, against 20 dollars a barrel in the 1990s -- has revived interest among foreign investors.

Repsol Chairman Antonio Brufau and Ali Moshiri, Chevron's head of production and exploration for Africa and Latin America, signed the agreement at a ceremony along with Chavez.

"We sign these agreements making use of our independence and sovereignty," Chavez said at the ceremony.

Projects underway in the Orinoco Belt represent 80 billion dollars in investments, Ramirez said.

The Orinoco Belt is projected to produce 4.6 million barrels a day by 2020, boosting overall Venezuelan production the following year to 6.8 million barrels per day, up from the current 3.0 million barrels per day, Ramirez said.

Some oil companies, like the US-based ConocoPhilips and Exxon Mobil, left Venezuela after the Chavez administration changed investment rules in 2007 and nationalized their assets.

But others, including Cheveron and Repsol, were willing to remain and invest under the new rules.

© 2010 AFP

0 Comments To This Article