Rafael Ramírez, Venezuela's Minister of Energy and Petroleum and President of PDVSA, and Paolo Scaroni, Eni's CEO, have signed in the presence of Venezuelan President Hugo Chávez Frías and Vincenzo Scotti, Undersecretary of the Italian Ministry of Foreign Affairs, an agreement for the development of Junin 5.
Junin 5 is a heavy oil block located in the Orinoco oil belt and situated some 550 kilometers south east of Caracas covering an area of approximately 425 square kilometers.
The Orinoco belt is the world's largest deposit of heavy oil with oil in place of 1,300 billion barrels which are mostly undeveloped. Its current oil production is approximately 600,000 barrels per day.
Under the terms of the agreement, which will be finalized in the next 60 days and submitted to the relevant approvals, PDVSA will hold 60% and Eni 40% of a joint venture company (Empresa Mixta ) to develop the Junin 5 field which has 35 billion barrels of certified oil in place. The JV company plans an early production phase of 75,000 barrels per day from 2013, and a long term production plateau of 240,000 barrels per day following the construction of a new refinery in Jose.
Eni will pay a bonus of $646 million, of which $300 million will be paid at the creation of the Empresa Mixta and the balance in tranches subject to the achievement of project milestones.
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