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Argentina and Venezuela to cooperate in $2.2B 100,000 bpd extra-heavy oil joint venture in Orinoco Belt

Argentina and Venezuela will form a joint venture targeting production of 100,000 barrels of extra-heavy oil per day in the Junin field area of the Orinoco Oil Belt. The $2.2 billion project will also include a refinery. The Orinoco Belt contains heavy and extra-heavy oil with a range of gravities from 4 to 16 degrees API (a measure of density); some Junin projects have oil ranging from 7-8 degrees API.

The US Geological Survey (USGS) characterizes extra-heavy oil as having an API gravity of less than 10°. Natural bitumen (i.e., oil sands) 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°.

The Orinoco Belt. Source: EIA. Click to enlarge.

As reported by Venezuela’s Minister of Mines and Petroleum, Rafael Ramirez, a study by both nations, certified the existence of a reserve of 1,700 million barrels of oil in the area.

Venezuela President Hugo Chavez said that oil cooperation between the two countries dates back to 2004, with the late Argentine President Nestor Kirchner. The alliance coincided with the release of the Orinoco Belt to participation by foreign companies in 2005.

The US Energy Information Administration notes that, according to Oil and Gas Journal (OGJ), Venezuela had 211 billion barrels of proven oil reserves in 2011, the second largest the world. This number constitutes a major upward revision, EIA points out, as the prior year OGJ put the country’s reserves at 99.4 billion barrels. The update results from the inclusion of massive reserves of extra-heavy oil in the Orinoco belt.

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 ‘Magna Reserva’ project in 2005, which involved dividing the Orinoco region into 27 blocks and quantifying the reserves in place. This initiative resulted in the upgrading of Venezuelan reserve estimates by more than 100 billion barrels.

In the 1990s Venezuela established four strategic associations to exploit these resources, later converting them to mixed companies with majority PdVSA ownership. These projects involve converting the extra heavy crude and bitumen to lighter, sweeter crude, known as syncrude... Venezuela plans to further develop the Orinoco Belt oil resources in the coming years. In 2009 Venezuela signed bilateral agreements for the development of four major blocks in the Junin area. [In 2010] the country awarded two more major development licenses in the Carabobo region. Venezuela expects these projects to add more that 2,000,000 bbl/d of heavy oil production capacity by the end of the decade.





With recoverable reserves of 513 billion barrels (and possibly more) Venezuela could supply South America (except Brazil) with enough crude for the next 100+ years and could push back peak crude production for a few decades. At $100+/barrel, it represents a huge source of welcomed revenues for the country.


US Geological Survey has been known to be on the high side with their estimates. It remains to be seen what these fields will produce and what the production profile is over time.

As far as peak oil, it remains to be seen what happens to Mexico and others that are in decline. This field and Brazil sound like endless oil, but we know there is no such thing. Best to conserve the worlds resources rather than use them up.

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