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OVL mulls raising stake in Venezuela oil project

ONGC Videsh Ltd and its partners are mulling raising stake in Venezuela's $20 billion Carabobo-I oil project even as India looks at raising crude oil imports from the Latin American country.

twitter-logo PTI   New Delhi     Last Updated: September 24, 2013  | 15:20 IST
OVL mulls raising stake in $20 bn Venezuela oil project

ONGC Videsh Ltd and its partners are mulling raising stake in Venezuela's $20 billion Carabobo-I oil project even as India looks at raising crude oil imports from the Latin American country.

OVL, which has 11 per cent stake in the project that will produce 400,000 barrels per day of oil (20 million tonnes) in four years, is looking at buying a similar stake that Malaysia's Petronas has decided to give up in the project .

On the other hand, Reliance Industries Ltd, which gets about 20 per cent of its oil needs from Venezuela, is looking at raising imports while state-run firms like Indian Oil Corp (IOC) and HPCL-Mittal Energy Limited (HMEL) are keen to start buying oil from the Latin American nation.

"Indian companies' representatives will visit Venezuela on October 7 and 8 and have some concrete proposals worked out," Oil Minister M Veerappa Moily said after meeting the visiting Venezuelean Oil Minister Rafael Ramirez.

Moily, who extended an invitation to President Nicolas Maduro to visit India, will visit Venezuela later.

"We have excellent relations with Venezuela which we want to deepen further," he said. "We are preparing roadmap for largest democracy in the world to have largest business in Venezuela."

"We are definitely asking for more oil fields, more crude (from Venezuela)," Moily said.

Ramirez said Venezuela has a contract to sell 400,000 bpd of oil to India. "India has very very huge refining capacity which is designed to processing medium and heavy crude oil which we produce... We are talking to increase the quantity of oil exported (to RIL and other companies)."

RIL currently imports about 300,000 bpd of oil from Venezuela for processing at its twin refineries at Jamnagar in Gujarat. It now wants to increase these volumes to the contracted levels of 400,000 bpd.

IOC wants to start importing 0.5 million tonnes immediately which it will raise to 1.5 million tonnes when its Paradip refinery is commissioned next year. HMEL too is looking at importing at least 2 million tonnes of Venezuelean oil for processing at its Bhatinda refinery in Punjab.

Venezuela has offered RIL 2-3 oil blocks including Boyaca 4 block and a separate section in the Ayacucho area of the Orinoco belt. Both these areas can produce 2,00,000 bpd (10 million tonnes a year) each.

Ramirez said his country was also interested in getting Indian contractors to come and work on infrastructure projects.

On OVL and its partners increasing stake in Carabobo-1, he said, "If Indian companies want to increase participation, I would welcome it."

Petroliam Nasional Bhd, Malaysia's state-run oil company, has decided to withdraw from the Carabobo-I project following dispute over terms with Venezuela's state explorer Petroleos de Venezuela SA (PdVSA).

OVL has 11 per cent stake in the project while Oil India Ltd (OIL) and Indian Oil Corp (IOC) hold 3.5 per cent each.

Spain's Repsol SA holds 11 per cent stake in the project while the remaining 60 per cent is with PdVSA.

All the partners in the project, including PdVSA, have right of first refusal or pre-emption rights to the Petronas stake.

The Carabobo-1 project in the Orinoco heavy oil belt began limited production in March this year and is planned to produce 480,000 barrels of oil a day at peak. The field requires $20 billion to develop and produce oil.

The consortia, which had in 2010 paid $1.05 billion to win the project, is also investing in a separate a 200,000 barrel per day upgrader to convert heavy crude into light crude oil.

"We had excellent discussion," Moily said. "We would like to invite Venezuelean President to visit India shortly. I would also like to visit Venezuela on invitations extended by his excellence Rafael Ramirez."

Years after it dropped out of a ONGC-led consortium for developing Venezuela's giant oil fields, RIL is now keen on taking a project to produce heavy oil in the South American nation. It last year signed a Memorandum of Understanding with Petroleos de Venezuela, or PDVSA, to develop a project in the Orinoco extra heavy crude belt.

Last year, RIL had also signed a new agreement to buy more crude oil from Venezuela. It had in 2008 signed a deal to buy 150,000 bpd of oil, which was gradually raised to 270,000 bpd.

Under the new 15-year agreement, the South American country would sell between 300,000 and 400,000 bpd.

RIL operates twin refineries at Jamnagar with a total refining capacity of 1.24 million barrels a day. Half of its crude diet can be heavy oil.

The company was in 2009 supposed to bid with the Indian consortium of ONGC Videsh Ltd, Indian Oil Corp and Oil India Ltd for one of the three giant oil blocks Venezuela was offering through auction. It, however, walked out of the consortium possibly due to delays in bidding.

After RIL's exit, OVL-IOC-OIL teamed up with Repsol YPF SA, Spain's biggest oil company, and Malaysia's Petronas to make a successful bid for the massive Carabobo-1 project in Venezuela's Orinoco heavy oil belt. The field has about 50 billion barrels of proven oil reserves.

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