World's Energy

31.10.2008 - [Neftegaz.RU] - Venezuela announced Thursday that it will open up bidding next month for contracts to exploit four areas of its heavy-oil-producing Orinoco River belt — soon expected to jointly produce 400,000 barrels of crude per day. Foreign oil companies have been invited to bid for a minority stake in the projects run by state oil company Petroleos de Venezuela SA, or PDVSA. Prospective partners include Chevron Corp. of San Ramon, California, China's National Petroleum Corp. and Colombia's Ecopetrol SA, Oil Minister Rafael Ramirez said at a ceremony to introduce the plan in Caracas. Ramirez said oil-producing nations must follow through with development plans even as OPEC announced production cuts of 1.5 million barrels per day last week to stem falling prices. Prices for light sweet crude fell to $65.96 a barrel on the New York Mercantile Exchange Thursday — 55 percent below July's record highs. "If we suspend projects, there won't be sufficient production capacity five years from now," Ramirez said. But independent Venezuelan economist Abelardo Daza said PDVSA is encouraging foreign participation in the recently nationalized Orinoco belt because it's struggling to increase production. PDVSA has been putting its resources toward non-oil commitments such as social programs and government slush funds rather than making the investment necessary to boost production, he said. While Venezuela says it is producing 3.2 million barrels per day, international monitors including the Paris-based International Energy Agency put output at around 2.4 million. Still, the invitation represents no broad policy shift: PDVSA will keep a 70 percent stake in the new projects, the Energy Ministry reported. Under Venezuelan law, PDVSA must maintain a 60 percent stake in all oil endeavors. Ramirez said the projects should recover at least 20 percent of some 61 billion barrels of oil in the area's deposits. Each of the four fields is expected to produce 100,000 barrels of oil per day by 2011, he said. Participating companies will also help build two US$6 billion upgraders that can lighten Venezuela's heavy crude to make it refineable, to be completed in 2014, Ramirez said. The bidding is closed to companies involved in litigation against Venezuela, Ramirez said. This would exclude U.S.-based companies Exxon Mobil Corp. and ConocoPhillips, both of which chose to leave the country and file for arbitration rather than accept a minority stake in four major oil projects nationalized by President Hugo Chavez's government last year. Interested companies will begin the bidding process next month, and the winners are expected to sign contracts with PDVSA in June 2009.