NEW DELHI - Indian state-run oil companies plan to invest nearly $3 billion in Venezuelan crude-oil production projects as part of efforts to address an energy shortage threatening India's economic growth.
India suffers from shortages of coal, crude oil and natural gas. Its power sector has been crippled by the coal shortage, which has delayed the development of multibillion-dollar projects.
In expanding its presence in Venezuela, India is following in the footsteps of rival China, which has become a major importer of Venezuelan crude as part of loans-for-oil agreements.
A consortium of state-run Indian companies led by ONGC Videsh Ltd., the overseas investment arm of Oil & Natural Gas Corp., plans to invest an additional $2.2 billion in the Carabobo-1 heavy oil project, the government said in a statement Wednesday.
ONGC already holds an 11% stake in Carabobo-1, while state-run Indian Oil Corp. and Oil India Ltd. each hold a 3.5% stake.
The project is expected to produce about 400,000 barrels a day of heavy oil, ONGC Videsh said on its website. That target is likely to be reached within "six to seven years," people familiar with the matter in the Venezuelan capital of Caracas said Wednesday.
The Carabobo-1 project, which is still in development phase, is forecast to begin producing by the end of this year with output slated to begin at "a four-digit figure," said one person close to the project who spoke on condition of anonymity.
Separately, ONGC Videsh plans to invest $500 million in the San Cristobal oil field, where it holds a 40% stake, the government said. The company has already invested $350 million in the project.
Indian state companies also will seek opportunities in other exploration and production projects, as well as the refining and marketing sectors, in Venezuela, the government said.
The investment announcement comes on the heels of a two-day visit by members of India's Commerce Ministry to Venezuela.
The hydrocarbons-rich South American country plans to invest around $15 billion a year in its vast Orinoco heavy oil reserves, where both the projects are located, in a bid to sharply increase output. Leftist President Hugo Chavez has pledged to ramp up crude production as his government looks to finance large expenditures on social programs, which have taken on an added importance as Mr. Chavez lines up a re-election bid in October.
Meanwhile, India plans to invest billions of dollars to achieve a target of a six-fold jump in overseas oil and gas output by 2030. The overseas assets of ONGC produced 6.21 million metric tons of crude oil, or 124,200 barrels a day, and 2.54 billion cubic meters of natural gas in the fiscal year that ended March 31.
Separately, the government said state-run pipeline utility GAIL (India) Ltd. is seeking opportunities in the natural gas marketing sector in Venezuela, and refiner Bharat Petroleum Corp. is keen to export and market base oil to Venezuela.
Copyright (c) 2012 Dow Jones & Company, Inc.
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