TOKYO (Dow Jones Newswires), Mar. 19, 2009
Japan and Venezuela signed a memorandum of understanding on energy cooperation Thursday that may give Japan access to an oil sands-like tar in the Orinoco basin and upstream liquefied natural gas.
Japan's first target is the Orinoco tar, a heavy oil that is costly to process, said Shin Hosaka, Petroleum and Natural Gas director of the Agency For Natural Resources and Energy, a unit of Japan's Ministry of Economy, Trade and Industry.
Crude oil prices at the $40-$50-a-barrel level don't justify investment in Orinoco tar, but "it's worthwhile paving the way now for the future - when oil prices will rise to near $150 a barrel again," Hosaka said.
Rafael Ramirez, Venezuela's energy minister signed the MOU with Toshihiro Nikai, Japan's METI minister in Tokyo Thursday, Hosaka said.
"We'll discuss various possibilities" for cooperation, he said, noting that the MOU doesn't specify any projects. A tender for energy blocks in the Orinoco basin, expected to be held in June or later this year, is a prime target, he said. Upstream natural gas is also on Japan's list, he added.
Japan relies on the Middle East for nearly 90% of its crude imports, and it wants to diversify its crude sources. The MOU is Japan's first energy pact with a South American nation.
Meanwhile, the agreement would help Venezuela to diversify its base of oil buyer countries -- and reduce its reliance on U.S. customers -- Ramirez said in the meeting, according to Hosaka.
In 2007, the government-backed Japan Bank for International Cooperation funded a 15-year, $1.89 billion oil purchasing deal between Marubeni Corp., Mitsui & Co. and state-run Petroleos de Venezuela SA, or PdVSA.
"This has really helped build relationships between the two countries," Hosaka said.
In the 2007 deal, the Japan side, including Marubeni and Mitsui, loaned a total of $3.5 billion to PdVSA, which committed to shipping the equivalent value of crude and oil products to Japan in exchange.
The first repayment under the deal was around 2 million barrels of crude, sent to Japan last autumn.
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