Venezuela and Russia complete oil deal negotiations


Caracas : Venezuela and Russia have completed negotiations for joint production from one of the fields in the oil-rich Orinoco Belt, Venezuelan state-owned oil giant PDVSA said.

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The Junin 6 Block will have an estimated “base production level of between 400 and 450,000 barrels of extra-heavy crude,” PDVSA said.

The National Petroleum Consortium, made up of Russia’s Rosneft, Lukoil, Gazprom, TNK-BP and Surgutneftegaz, will have a 40 percent stake in the project, while PDVSA will hold a controlling 60 percent interest.

The joint venture “will operate for a period of 25 years, under the terms laid out by the Ministry of the People’s Power for Energy and Petroleum,” PDVSA said.

“This new strategic alliance between Venezuela and Russia is part of the new multipolar vision” that President Hugo Chavez’s administration “has designed in its investment plans to maximize the use of its energy resources,” PDVSA said.

The state-owned oil company, however, did not confirm press reports that the consortium would need to invest some $30 billion to develop Junin 6.

Junin 6 “has proved reserves of some 10 billion barrels of petroleum, which will allow for production of some 400,000 barrels per day for 25 years until a recovery rate of 20 percent is achieved,” the official ABN news agency reported.

The Orinoco Belt, located in east-central Venezuela, is believed to hold the world’s largest petroleum reserves, with most of the oil heavy and extra-heavy crude that is more expensive to refine because it requires additional processing.

Venezuela has been working with foreign oil companies – both private and state-owned – to certify its reserves, which have been estimated at 314 billion barrels, making them the world’s largest petroleum reserves.

The South American nation is the world’s fifth-largest oil exporter.