Caracus: Venezuela, the nation that potentially holds the worlds largest oil reserves ahead of Saudi Arabia, may invest multi-billion dollars in oil refinery and petrochemical projects in India and give New Delhi a stake in its large oilfields.
Latin America’s only OPEC member country is looking to diversify its oil exports and has agreed to look into feasibility of an integrated multi-billion-dollar oil project with India that would see ONGC Videsh Ltd getting a stake in a big field giving at least 200,000 barrels of oil per day and Venezuelan national oil company PDVSA investing in refinery-cum-petrochemical project in India.
The agreement came during the visit of Petroleum Minister Murli Deora to Venezuela, the first by any Oil Minister from India to the Latin American nation.
Venezuelan Oil Minister Rafal Ramirez Carreno said his nation was impressed by India’s refining capacity and PDVSA will look at setting up a refinery project in India.
“We see export of 200,000 barrels per day of oil (from field jointly operated by PdVSA and OVL in Venezuela) to a refinery project in India,” he said, indicating that the Indian flagship firm would be given a large field in the Orinoco heavy oil basin.
The Orinoco heavy oil basin may hold up to 270 billion barrels of oil reserves in addition to the existing 80 billion barrels of proven oil reserves, making it the nation with largest oil reserves ahead of Saudi Arabia that has close to 160 billion barrels of reserves.
OVL is among the host of national oil companies, including those from Brazil (Petrobras), Iran (Petropars) and China (CNPC) to join the reserve certification programme for the Orinoco heavy oil basin.
The programme is called Magna Reserva and Venezuela would consider giving oilfields thus certified to participating companies.
Deora said India was investing in oilfields abroad for its energy security and it has made the strategic move to get a foothold in Venezuela. Oil assets abroad would give the nation that imports 79% of its crude needs, security of supplies.
As a beginning, OVL has taken 40% stake in the San Cristobal oilfield to pump 232.38 million barrels of crude over 25 years.
OVL and PDVSA, which will hold 60% stake in the field, signed joint venture contracts on Tuesday for the field that has an in place reserve of 1.04 billion barrels.
“This is just the beginning of a relationship between the two countries. The two countries compliment each other. Venezuela has large oil reserves (while) India is an oil consuming country,” Ramirez said.
Petrolera IndoVenezolana SA, the new venture, will double crude output from the field to 60,000 barrels per day in next few years, he said. In addition, OVL is also undertaking work to certify reserves in the Junin area of the Orinoco.
OVL will make a total investment of $355.738 million comprising signature bonus of $173.1 million for the stake.
Besides, ONGC may also be required to sanction loan of $355.74 million for the project that covers 160.16 square kilometres and is located in Junin in the Orinoco Heavy Oil belt of Venezuela.
The production from San Cristobal field was started in October, 1981. Till date 44 wells have been drilled, of which 24 are active. The field is currently producing about 24,000 barrels of oil per day.
Capital expenditure on the field would be $446.13 million, Ramirez said.
India, the fastest-growing economy after China, estimates oil demand will rise 62% over the next five years to 241 million tons a year, or 4.8 million barrels a day.
OVL and the PDVSA subsidiary will form a joint venture company to operate the San Cristobal project. The Indian firm will have two directors on the board of the joint venture company, while PDVSA subsidiary would have three directors, including the chairman.
Venezuela, the only OPEC member from Latin America, is one of the top four oil producing countries in the world. It has 87.04 billion barrels of proven oil reserves, largest in the western hemisphere.
Officials said OVL would look at possibilities of shipping its share of oil from San Cristobal to India.