News APP

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  gplay

This article was first published 10 years ago
Rediff.com  » Business » Reliance eyeing Petronas stake in Venezuela project

Reliance eyeing Petronas stake in Venezuela project

Source: PTI
January 14, 2014 19:26 IST
Get Rediff News in your Inbox:

Reliance Industries is looking at buying Petronas' 11 per cent stake in Venezuela's $20 billion Carabobo-1 project, a company official said.

RIL, which had in 2009 dropped out of the winning bid made by an ONGC-led consortium for developing the giant Carabobo-1 project, is "looking at taking over the participating interest of Petronas," RIL senior vice-president Swagat Bham said at the Petrotech 2014 conference.

The company was in 2009 supposed to bid with ONGC Videsh Ltd for one of the three giant oil blocks that Venezuela had offered through auction. It walked out of the consortium, possibly due to delays in bidding.

After RIL's exit, OVL teamed up with Indian Oil Corp and Oil India Ltd and involved Repsol YPF SA, Spain's biggest oil company, and Malaysia's Petronas to make a successful bid for the massive Carabobo-1 project in the Orinoco heavy oil belt.

The field, which had about 50 billion barrels of proven reserves, can produce a minimum of 400,000 bpd of oil.

Petroliam Nasional Bhd, Malaysia's state-run oil company, has decided to withdraw from the Carabobo-I project in August last year following dispute over terms with Venezuela's state explorer Petroleos de Venezuela SA (PdVSA).

The stake was first offered to the partners, all of whom including the Indian consortium declined. Besides RIL, Chinese firms too are said to be interested in Petronas stake.

Bham said RIL was looking at Petronas stake as well as other heavy oil upgrade projects in Venezuela for a possible participation.

Latin America, he said, was of interest to RIL and the company was also eagerly looking at opening up of exploration licenses in Mexico.

OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has 11 per cent stake in the project while OIL and IOC hold 3.5 per cent each. Spain's Repsol SA holds 11 per cent stake in the project while the remaining 60 per cent is with PdVSA.

All the partners in the project, including PdVSA, have right of first refusal or pre-emption rights to the Petronas stake. Besides Indians, Repsol too informed of the decision not to buy Petronas stake before the expiry of the 30-day deadline on September 27, 2013. The Indians had, however, promised to look for a suitable replacement for Petronas.

The Carabobo-1 project in the Orinoco heavy oil belt began limited production in March this year and is planned to produce 480,000 barrels of oil a day at peak. The field requires $20 billion to develop and produce oil.

The consortium, which had in 2010 paid $1.05 billion to win the project, is also investing in a separate a 200,000 barrel per day upgrader to convert heavy crude into light crude oil. 

In October last year, RIL had said it has signed an agreement with PdVSA to jointly "evaluate the development plan for Ayacucho 8 block" in the oil-rich Orinoco belt of Venezuela.

RIL and PdVSA also then extended the term of an MOU they signed last year by one year for continued cooperation.

"The signing of the Joint Study Agreement for Ayacucho Block 8 and the extension of MOU marks further strengthening of the long-standing relationship between RIL and PdVSA as well as between India and Venezuela," RIL had said in a statement then.

RIL currently imports about 300,000 barrels per day of oil from Venezuela for processing at its twin refineries at Jamnagar in Gujarat. It now wants to increase these volumes, possibly to 400,000 bpd.

The company signed a Memorandum of Understanding with PdVSA in 2012 to develop a project in the Orinoco extra heavy crude belt.

Venezuela had offered 2-3 oil blocks, of which Ayacucho 8 has been selected for the joint study. The block can produce 200,000 barrels per day of oil (10 million tonnes a year).

Besides developing the field, the project may also involve setting up an upgrader to convert the synthetic oil into oil that can be processed in refineries.

Last year, RIL had signed a new agreement to buy more crude oil from Venezuela. It had signed a deal in 2008 to buy 150,000 bpd of oil, which was gradually raised to 270,000 bpd.

Under the new 15-year agreement, the South American country would sell between 300,000 and 400,000 bpd. RIL's Jamnagar refineries can process 1.24 million barrels a day. Half of its crude diet can be heavy oil. 

Get Rediff News in your Inbox:
Source: PTI© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
 

Moneywiz Live!