Russians to Pay $600MM, Not $1B, to Start Venezuela Oil Drilling


Orinoco Belt Regions
(Click to Enlarge)

CARACAS (Dow Jones), Oct. 6, 2009

A Russian oil consortium will only have to pay $600 million, not the $1 billion Venezuela previously said, as a down payment for its participation in exploiting Venezuela's Orinoco oil fields, a top lawmaker indicated Tuesday.

A group of five Russian firms -- OAO Rosneft (ROSN.RS), Lukoil (LKOH.RS), OAO Gazprom (GAZP.RS), TNK-BP and OAO Surgutneftegaz (SNGS.RS) -- are planning a joint venture with state energy firm Petroleos de Venezuela to develop the Junin 6 block in eastern Venezuela.

President Hugo Chavez and other administration officials said last month the Russian firms already paid a $1 billion bond to have access to the oil block, which officials say has huge proven reserves and could produce 450,000 barrels of crude a day.

But in a statement Tuesday, Angel Rodriguez, a senior Venezuelan lawmaker and head of the congressional energy commission, said the $1 billion bond will be paid 10 days after the joint venture is finalized. He also said Venezuela would shoulder $400 million of that, with the Russians paying the other $600 million.

Officials have estimated an overall investment of anywhere between $14 billion and $26 billion will be needed to develop the Junin 6 block.

Rodriguez did not indicate when the joint venture deal would be finalized. The $1 billion would go toward the building of highways, schools, housing and other social or infrastructure projects, he said.

PdVSA would control 60% of the joint venture, with the Russians owning the other 40%.

The Chavez-led government has talked about plans for nearly $70 billion in oil investments over the coming years as this oil-rich nation seeks to ramp up dwindling production numbers and boost its sagging economy.

But so far, nearly all those plans are based only on memorandums of understanding, with no solid investment commitments from foreign oil companies.

Lower global oil prices amid a weak worldwide economy may be one reason for less-enthusiastic foreign oil investment in Venezuela. An uncertain regulatory environment in this Socialist-leaning country is seen as another cause.  

Copyright (c) 2009 Dow Jones & Company, Inc.

Related Companies
 Company: Lukoilmore info


 - Lukoil Finds Oil at Iraq Well (Feb 22)
 - Lukoil: CEO, VP Sell $34 Million Worth Of Shares (Dec 30)
 - Sources: Russia's Lukoil Appoints New VP For Sales And Supplies (Dec 27)
 Company: OAO Gazprommore info
 - Russia's Gazprom Cuts Gas Condensate Exports as Tax Bill, Tariffs Bite (May 17)
 - Russia's Gazprom Says Construction of Turkish Steam Begins (May 8)
 - Russian Official: Belarus Will Pay Russia Over $720 mln in Gas Debts (Apr 3)
 Company: Rosneftmore info
 - Black Sea Diesel Plant Upgrade Delayed by a Year to 2019 (May 19)
 - Rosneft Net Income Lower Than Expected, Hit By Stronger Rouble (May 5)
 - Russian Oil Major Says US Shale Growth Imperils OPEC Deal (Mar 13)
 Company: PDVSAmore info


 - Fuel Shortage Again Hits Oil-rich Venezuela Amid Refinery Woes (May 17)
 - PetroVietnam Says Venezuela Oil Project Still Stalled, Hopes To Reactivate (May 3)
 - PDVSA Notes Rally After Oil Company's $2.2 Billion Payment (Apr 12)
 Company: Surgutneftegasmore info
 - Russia's Surgut to Launch Shpilman Oil Field (Sep 3)
 - Minister: Asian Firms To Replace Western Energy Majors If They Leave Russia (Sep 22)
 - Russians to Pay $600MM, Not $1B, to Start Venezuela Oil Drilling (Oct 6)
 Company: TNK-BPmore info
 - Rosneft Board Member Rejects Criticism of TNK-BP Buyout (Oct 4)
 - Rosneft: TNK-BP Integration 'Mostly Complete' (Jun 20)
 - TNK-BP Acquisition Boosts Rosneft's 1Q Production (Apr 30)
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Logistics Analyst I (Road) - Direct Hire
Expertise: Logistics Management
Location: Houston, TX
 
Logistics Analyst II (Road) - Direct Hire
Expertise: Logistics Management
Location: Houston, TX
 
Safety Specialist located in Madison, MS
Expertise: Regulatory Compliance
Location: Madison, MS
 
search for more jobs

Brent Crude Oil : $53.61/BBL 2.09%
Light Crude Oil : $50.33/BBL 1.98%
Natural Gas : $3.26/MMBtu 2.51%
Updated in last 24 hours