Venezuela's PdVSA, ENI To Sign Orinoco Venture

Orinoco Heavy Oil Belt
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Petroleos de Venezuela and Italy's ENI will strike a deal Friday that would bring ENI SpA into the oil-rich Orinoco basin as a partner, the Venezuelan foreign ministry said Thursday.

"ENI consolidates its presence in Venezuela and becomes a PdVSA partner in the Orinoco river belt," the ministry announced in a statement. Both parties will sign the accord in an official event Friday. Italian Foreign Minister Massimo D'Alema is expected to attend, according to the statement.

Venezuela offered no further details about the planned accord.

Earlier this month, Venezuela agreed to pay ENI $700 million in cash as compensation for the Dacion oil field the government seized in 2006. The deal put an end to an arbitration process originally petitioned by ENI.

The final settlement between the two companies came as PdVSA is battling Exxon Mobil in court over Exxon's compensation stemming from an oil project nationalization last year.

Unlike other foreign companies, Exxon and ConocoPhillips rejected Venezuela's move to take majority stakes in key heavy oil ventures last summer. President Hugo Chavez ordered the state to take control of these projects and offer foreign partners minority stakes. Both U.S. companies rejected the move and called for arbitration proceedings.

Exxon went further early this year and managed to secure court orders freezing more than $12 billion in PdVSA assets overseas. PdVSA is still fighting the move.

Copyright (c) 2008 Dow Jones & Company, Inc.

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