An international consortium of ONGC Videsh Ltd (OVL), the overseas arm of state-owned Oil and Natural Gas Corporation Ltd (ONGC), is acquiring 40% stake in a joint venture with Venezuela’s state owned oil firm Petroleos de Venezuela SA (PDVSA). The JV will develop a multi billion integrated oil project in Venezuela, said an ONGC statement. The remaining 60% stake is with Corporacion Venezolana del Petroleo (CVP), a subsidiary of PDVSA.

Apart from ONGC Videsh, the consortium has four other companies as partners including two Indian firms, India Oil Corporation Ltd (IOC) and Oil India Ltd (OIL), Repsol YPF SA of Spain and Petroliam Nasional Berhad (Petronas) of Malaysia. OVL, Repsol and Petronas have 11% stake each, while OIL and IOC hold 3.5% stake in the JV. Reports suggest that the consortium will pay $1.05 billion to Venezuela for the stake buy and invest another $9 billion in developing the project.

The consortium has acquired two oil blocks, Carabobo Norte I and Carabobo Centro I, located in the Orinoco heavy oil belt in eastern Venezuela, added the statement. The blocks have estimated reserves of 235 billion barrels of heavy and ultra heavy oil.

Post this development, the JV will build heavy oil production facilities and upgrade the infrastructure of the project. It is expecting production of around 2 lakh light crude oil per day from the oil belts. The consortium has a license of 25 years for digging initially, with a provision of 15 years extension.

CVP and the consortium will sign the final agreement sometimes in March this year, after the fulfillment of certain conditions including the investment approvals of OVL, IOC and OIL by the government of India, the statement added.

Reports suggest that Venezuela currently has reserves of 172.3 billion barrels of oil and hopes to increase that amount to 316 billion barrels by developing the Orinoco belt.

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