PDVSA investment announcements show preference for bilateral deals, says analyst

Bnamericas Published: Friday, September 25, 2009
A number of announcements made in late September for new investments in Venezuela's prolific Orinoco heavy crude belt demonstrate the country's continued preference for bilateral deals, RoseAnne Franco, an analyst with PFC Energy, told BNamericas. "With regard to the recent wave of investment commitments targeting the Orinoco, they are similar to the earlier announcements. Some will move towards fruition and some won't," Franco said. "Still, the path of bilateral agreements appears to be the one that Caracas is most comfortable with in pursuing Orinoco development," she added. Venezuela's state oil company PDVSA is hoping to add 3Mb/d of new production from the Orinoco belt to its current stated production of around 3.5Mb/d, although international agencies including oil cartel OPEC frequently place Venezuela's total production closer to 2.3Mb/d. To see the increased production, PDVSA and a Russian consortium are expecting to invest US$25.9bn to develop the Junín 6 block, and China will also invest US$14bn-16bn to develop a Junín block with PDVSA. PDVSA is also currently tendering seven new Carabobo blocks and also looking for partners for Junín 1, 5, 10 and 11. While PDVSA officials said that France's Total (NYSE) would invest US$25bn with PDVSA to develop Junín 10, local press reported that Norway's StatoilHydro (NYSE: STO) could also be in the running for the block. Venezuela's oil and energy ministry ( Menpet) and PDVSA will meet with interested companies on September 29 to discuss the economic terms of the Carabobo tender. Menpet and PDVSA launched the round last year. Bids were originally to have been due on April 16. Menpet is expecting the blocks to be awarded to three consortiums.

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