OVL strikes a deal with Venezuela's PDVSA for redevelopment of San Cristobal project

The agreements signed on Nov 4 provides a mechanism to liquidate OVL's outstanding dividends from the project

ONGC Videsh Ltd (OVL) and Petroleos De Venezuela SA (PDVSA) have signed two agreements for facilitating redevelopment of the San Cristobal joint venture project in Venezuela. 

The agreements signed on November 4 provides a mechanism to liquidate ONGC Videsh’s outstanding dividends from the project. At the same time, OVL needs to obtain long-term financing for the capital investments for implementing the remediation plan of the project. The remediation plan aims to invigorate the field from its current production level of about 18,000 billion barrel per day to 27,000 bbl per day by the use of water flooding technique.

OVL, the overseas arm of state-owned ONGC, owns 40% of Venezuela's San Cristobal oilfield and had invested about $190 million in the project in 2008. State-run Petroleos de Venezuela SA (PDVSA) holds the remaining stake. San Cristobal project (Project) is located in the Zuata Subdivision of proliferous Hugo Chavez Fria Orinoco Heavy Oil belt, in the Junin Norte Block in eastern Venezuela. The joint venture was incorporated in April 2008 consequent to a memorandum of understanding (MoU) signed in March 2005 at New Delhi to jointly develop oil and gas exploration and production projects in Venezuela.

According to reports, OVL may provide $318 million financing to help raise output at a Venezuelan oilfield to supply 17,000 barrels per day of crude oil to India to clear past dues. Earlier in August, OVL and PDVSA had entered into a memorandum of cooperation on training and education under which ONGC Videsh has sponsored training for a batch of petroleum engineers from PDVSA in masters programs at the premier petroleum institute of India - Indian School of Mines, Dhanbad.