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Rosneft and PDVSA sign joint venture agreement for Orinoco heavy-oil Carabobo-2 project

Russian oil and gas major Rosneft, 75% owned by the government, and the Venezuelan Corporacion Venezolana del Petroleo (CVP), a subsidiary of PDVSA, signed an agreement to create a joint venture to develop heavy oil reserves in Venezuela in the framework of the Carabobo-2 project. (Earlier post.

Rosneft’s stake in the joint venture will amount to 40%, the other 60% will be held by CVP. The Carabobo-2 project includes blocks Carabobo-2 North and Carabobo-4 West with a total area of 342 square kilometers located in the Orinoco river’s heavy crude belt. Reserves at the blocks are estimated at 40 billion barrels (6.5 billion tonnes). Commercial oil production is expected to peak at more than 400 thousand barrels per day (about 25 million tonnes per year).

According to the memorandum, Rosneft is to pay a bonus of $1.1 billion for entering the project in two tranches (40% and 60%) and also to offer a loan of $1.5 billion to Corporacion Venezolana del Petroleo with the maximum yearly take-off of $0.3 billion.

The joint venture plans to perform the entire cycle of site exploration and development, building ground facilities and field pipelines. There are also plans for building an upgrader to increase the quality of the extracted oil.

The Orinoco Belt contains heavy and extra-heavy oil with a range of gravities from 4 to 16 degrees API (a measure of density) as well as large deposits of natural bitumen (i.e., oil sands). The US Geological Survey (USGS) characterizes extra-heavy oil as having an API gravity of less than 10°. Natural bitumen shares the attributes of heavy oil but can be yet more dense and viscous. According to the Government of Alberta, Canada, Athabasca bitumen has an API gravity number of less than 10°.

President and Chairman of the Management Board Igor Sechin said that the new joint venture would be named Petrovictoria. The companies actively work on other new projects including the Venezuelan shelf, he also added.

The companies have also signed a confidentiality agreement allowing Rosneft to obtain geological data on Venezuelan offshore blocks for possible future cooperation.

Earlier Rosneft and the Venezuelan company had signed a memorandum of intent to study several gas sites on this country’s shelf.

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