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  HOME | Oil, Mining & Energy (Click here for more)

Venezuela Awards 2 Blocks in Massive Oil Region

CARACAS – Consortiums led by Spain’s Repsol YPF and U.S.-based Chevron Corp. were awarded blocks in Venezuela’s vast Orinoco Belt in a much-anticipated auction.

Venezuela on Wednesday assigned the rights to exploit the Carabobo 1 block to a consortium that included, in addition to Repsol, India’s Oil and Natural Gas Corp., Oil India Ltd. and Indian Oil Corp. and Malaysia’s Petronas.

Another block, Carabobo 3, was awarded to a consortium led by Chevron and that also included Japan’s Mitsubishi Corp. and Inpex Corp. and Venezuela’s Suelopetrol.

In both blocks, the winning consortium will have a 40 percent stake and the remaining 60 percent stake will be held by Venezuelan state oil giant Petroleos de Venezuela.

According to official Venezuelan figures, the blocks have the potential to produce a combined total of at least 800,000 barrels of crude per day by 2016 and will require $30 billion in investment.

“This is something historic,” President Hugo Chavez said of the auction. “It is extremely important” and is the product of “a transparent bidding process” that began on Oct. 30, 2008, with the participation of 19 foreign companies.

The socialist president hailed the “great output prospects of Carabobo,” one of four exploration and production areas in northeastern Venezuela’s massive Orinoco Belt.

He also stressed the importance of foreign investment in developing the potential of that region, which the U.S. Geological Survey recently said is the world’s largest petroleum reserve with more than 500 billion barels of recoverable crude.

“We receive with great affection this absolutely necessary foreign investment; we can’t develop the Orinoco Belt ourselves ... the interest is mutual, you (the multinational companies) are here because you need (the oil),” the leftist president said in a signing ceremony at the Miraflores presidential palace.

Venezuelan Oil Minister Rafael Ramirez, who is also the president of state-owned oil company PDVSA, said the Repsol-led consortium offered to pay a $1.05 billion signing fee to Venezuela and will loan PDVSA $1.05 billion to finance the development of the project.

The Carabobo 1 block has the potential to produce up to 480,000 barrels per day and the project also includes construction of a refinery with the capacity to process 200,000 bpd.

Ramirez, meanwhile, estimated the potential output of the Carabobo 3 block at between 400,000-480,000 bpd by 2016.

The two Carabobo blocks will be exploited by joint ventures – to be formed on March 25 – in which the winning consortiums will have a 40 percent stake and PDVSA will have a 60 percent stake.

It had been officially announced that three Carabobo blocks were to be auctioned off, but Ramirez said the bidding process for the Carabobo 2 area would take place at a later time, without offering details.

The Carabobo exploration and production area has an estimated 30 billion barrels of recoverable reserves, according to official figures.

Repsol already is a partner in a joint venture with PDVSA to exploit the Barua Motatan field, which is located in the western state of Zulia and has the potential to produce an estimated 40,000 bpd.

The Spanish company also will exploit the Perla 1X well in partnership with Italy’s Eni and PDVSA. That field has “recoverable gas reserves of between 1 billion and 1.4 billion barrels of oil equivalent, enough to fulfill Spain’s gas demand for five years,” Repsol said in a statement last October.

Venezuela, a founding member of OPEC, is the world’s fifth-leading oil exporter and the fourth-leading supplier of crude to the United States. EFE

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