PDVSA and PetroChina move ahead with 400,000 barrel per day oil refinery in China; processing Orinoco heavy and extra-heavy crude
Petróleos de Venezuela SA (PDVSA) and PetroChina recently signed the Project for Development and Establishment of a joint venture to realize the future development of the Nanhai refinery. To be sited at Jie Yang City, Guangdong Province, the Nanhai refinery will be operational in early 2015, with a capacity to process 400,000 barrels of heavy and extra heavy crude oil per day (400 kbd) from the Orinoco Oil Belt.
This signing confirms the agreement of energy cooperation between PDVSA and China National Petroleum Corporation signed in March 2007, in which according both state oil companies will work together through joint ventures to produce and upgrade 800,000 barrels a day of heavy and extra heavy crude, which would be drawn in Venezuela and processed at three refineries to be built in China.
The agreement will regulate the activities to be carried until the completion of basic engineering and to the time of formation of the joint venture, which will have the responsibility to build the refinery, with 40% participation by PDVSA.
Venezuela has seen significant upward revisions in its proven oil reserves over the past few years due to the inclusion of massive reserves of extra-heavy oil in the Orinoco Belt. Oil and Gas Journal (OGJ) pegged Venezuela’s 2011 reserves at 211 billion barrels, up from 99.4 billion barrels the year before. OPEC’s Annual Statistical Bulletin 2010/2011 puts Venezuela’s 2010 proven oil reserves at 296.5 billion barrels, up 40.4% from the 2009 level of 211.2 billion barrels.
According to OPEC figures, then, Venezuela has now surpassed Saudi Arabia in terms of oil reserves (296.5 billion vs. 264.5 billion barrels) with this inclusion of the extra heavy oil.
Venezuela contains billions of barrels in extra-heavy crude oil and bitumen deposits, most of which are situated in the Orinoco Belt in central Venezuela, notes the US Energy Information Administration (EIA). According to a study released by the US Geological Survey, the mean estimate of recoverable oil resources from the Orinoco Belt is 513 billion barrels of crude oil.
PDVSA began the its Magna Reserva project in 2005, which involved dividing the Orinoco region into 27 blocks and quantifying the reserves in place—this initiative resulted in an initial major upgrading of Venezuelan reserve estimates by more than 100 billion barrels, the EIA says.
OGJ ranks Canada’s proven oil reserves at 175.2 billion barrel—third globally, behind Venezuela and Saudi Arabia. Approximately 170 billion barrels (97%) of Canada’s reserves are unconventional, mainly from bitumen deposits (i.e., the oil sands).