Venezuela promises oilfields to India

Venezuelan President Hugo Chavez on Wednesday promised to give India more oilfields in its heavy-oil belt, touted to hold the world's largest fossil fuel reserves, as he seeks to tap the world's second fastest growing economy to diversify energy trade beyond US.

The 53-year-old leader, who proudly calls Venezuelans as Indians, indicated that the Latin America's only OPEC member- nation may set up a refinery-cum-petrochemical complex in India to process its crude oil.

Receiving India's Petroleum Minister Murli Deora at his presidential palace Hugo Rafael Chavez Frias expressed his intention to supply one million barrels per day of oil to India in the near future.

He readily agreed to Deora's request for giving India's flagship ONGC Videsh Ltd a stake in one of the four oilfields in the Carabobo and a piece in the Junin Norte Block in the Orinoco heavy-oil basin.

"The political answer is yes," he said, responding to Deora's request. "Now technical team (of Venezuelan national oil company PdVSA) will deal with technical aspects and I am certain even technical aspects will be positive," he told visiting Indian journalists after a 75-minute meeting with the Indian oil minister, the first to visit his country.

The Junin area is believed to hold some 500 billion barrels of in place oil reserves, of which Junin Norte may have about 7-8 billion barrels.

The Carabobo heavy-oil field, which is also in the Orinoco region, may hold 213 billion barrels. About 10 to 20 per cent of these reserves can be recovered. These would be in addition to the 40 per cent share OVL has in the San Cristobal oilfield for which an agreement was signed on Tuesday.

OVL and its 60 per cent partner Petroleos de Venezuela S.A (PdVSA) plan to produce 40,000 barrels per day of oil from the field over an 8-year plateau period after investing over $ 446 million.

"Today we are producing 3.2 million barrels of oil per day. Very soon, we will reach 5 million bpd and even 6 million bpd. So in near future, we might be sending to India one million bpd and it is totally feasible," Chavez said, indicating that oil produced from fields operated by OVL would be exported to India for conversion into fuel.

Venezuela, currently, exports 2 million bpd oil to the US. Another 3,00,000 bpd is exported to China, which Chavez wants to raise it to one million bpd.

"We are happy with the first step we took yesterday (when OVL and PdVSA signed joint venture agreement)... What we are doing is extremely important... to increase joint production (and) to take our oil to India. We are also keen to participate in refining and distribution in India," he said.

PdVSA has been in discussions with PetroVietnam and Petronas of Malaysia for setting up a refinery in Asia by 2012-13. The locations can be Vietnam, Malaysia or India.

India offers strategic locational advantage, Deora explained to Chavez who indicated PdVSA may prefer the nation that already exports fuel to countries as far as Latin America and the US.

"India is one of the largest markets in the world and the visit of the minister (Deora) and his delegation is a very positive signal," he said, adding Venezuela was diversifying its oil trade into Africa, Europe and Asia.

A career military officer, Chavez, defended his nationalisation sphere that this month saw cement industry being taken over by the State. "The nationalisation that we have performed is to solve the old problem that we had inherited. All these businesses were bad for Venezuela."

He, however, assured India of honouring all the signed contracts. "The agreements with India are good because business signed with India will not generate monopoly but will result in oil exports. That is common interest between the two countries," he added.

Making his preferences clear, he said Venezuela under him would choose government to government deals over agreements with private firms as governments represent the people.

"We are not doing business to make money and to benefit a tiny minority or to make rich people richer. We are doing business to benefit our people".

The oil from Venezuela, he said, would "modestly contribute to the growth of India" while calling for a free multi-polar world. "Dont forget, we are also Indians," he proudly announced.

OVL and PdVSA have been working together in the Quantification and Certification project in Junin Norte Block covering an area of about 600 sq km. The recertification jobs will be over by December 2008, after which PdVSA is scheduled to award the development through bidding process.

OVL is expected to be given preference in the development and production phase. The same process would be followed in the four blocks in the Carabobo region (erstwhile Cerro Negro area).

Carabobo-I block, that has been certified to hold 10 billion barrels of heavy crude oil reserves, may see Brazil's state-owned oil company Petroleos de Venezuela SA taking 10 per cent stake and PdVSA getting 60 per cent.

OVL may get the remaining 30 per cent in this field or a similar stake in one of the three remaining fields in the Carabobo region.

Venezuela's leftist President Hugo Chavez is working to wean the OPEC nation off its traditional reliance on energy markets in the United States, which relies on Venezuela for around 12 per cent of its oil imports.

Chavez wants to cement closer ties with state-run firms from nations such as Iran, China, Russia, Cuba and India. These energy companies help PdVSA quantify the heavy-oil reserves in the Orinoco region, a process that may see Venezuela topple Saudi Arabia to become the nation holding the world's largest oil reserves.