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OVL, IOC, OIL to invest $2.18 bn in Venezuelan oil project

BS Reporter  |  New Delhi 

ONGC Videsh Ltd (OVL), Indian Oil Corporation (IOC) and Oil India Ltd (OIL) will invest $2.18 billion in a $15-20-billion Venezuelan project, expected to produce 3.6 million tonnes crude oil annually. This is India’s second-biggest overseas energy investment, after Sakhalin ($2.77 billion) and Imperial ($2.1 billion).

The three signed an agreement regarding this with Venezuela’s state-owned Corporacion Venezolana Petroleo SA, a subsidiary of Petroleos de Venezuela SA, in the presence of Indian Oil Minister Murli Deora and Venezuelan President Hugo Chavez Frias. Spanish energy major Repsol YPF and Malaysia’s Petroliam Nasional Berhad (Petronas) are the other international partners in the consortium.

OVL will invest $1.33 billion, while IOC and OIL will invest $454 million each in the 400,000 barrels per day (bpd) Carabolo-1 project between 2010 and 2015. Early output of at least 50,000 bpd is slated to start in 2012-13, before rising to its peak in 2016.

OVL holds 11 per cent stake in the project, while IOC and OIL have 3.5 per cent each.

The consortium will build heavy oil production facilities, upgrade facilities and associated infrastructure. The upstream production facilities are expected to produce around 400,000 bpd of extra heavy oil, of which approximately 200,000 bpd will be upgraded into light crude oil in a facility to be located in the Soledad area, Anzoátegui State. The licence term will be for 25 years, extendable for another 15 years.

The project cost is estimated to be $15–20 billion and is one of India’s major investments in the Latin American oil major, according to a government release.

After the signing ceremony, Murli Deora met Chavez to explore the possibility of sourcing Venezuelan crude for new refinery capacities coming up in India. “Discussions were also held on the possibility of award of the Junin Norte block, where new oil reserves are being certified by OVL (to Indian firms),” the statement said.

The Carabobo area, located in eastern Faja, has a massive resource potential. The US Geological Survey, in a recent report, estimated mean volume of recoverable heavy oil in Faja to be as high as 513 billion barrels, one of the few global opportunities open to private investment, according to ONGC, OVL’s parent company.

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First Published: Fri, May 14 2010. 00:27 IST
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