Chavez Tweets $40B Foreign Oil Deals

CARACAS (Dow Jones Newswires), May 10, 2010

President Hugo Chavez said in a message sent from his Twitter account that Venezuela on Wednesday will sign investment deals for $40 billion with foreign oil companies from the U.S. and elsewhere.

"I want to inform my dear people that Wednesday the 12th [of May] we will be signing investments of $40 billion with oil companies from India, Japan, Spain and the U.S.," Chavez Tweeted late Sunday on the social networking site.

Government officials weren't immediately available to explain precisely what investments Chavez was referring to. However, oil firms from the four countries he mentioned are involved in consortia that in February won the right to drill alongside state oil firm Petroleos de Venezuela, or PDVSA, in the Carabobo blocks.

As such, analysts say Chavez' message likely indicates that Wednesday is the day the final deal will be struck with the oil companies to move forward on drilling in the heavy oil fields of the eastern Orinoco region.

Venezuela's Congress last month gave the green light for the joint venture deals between PDVSA and the foreign firms to be signed.

The Carabobo 3 block was awarded to a consortium that includes U.S. company Chevron Corp. (CVX) and Japanese firms Mitsubishi Corp. (MSBHY, 8058.TO) and Inpex Corp. (1605.TO).

The consortium would have to pay an initial $500 million when it signs the deal, and Chevron would pay the most of that chunk, about $425 million, since it's the majority stakeholder in the consortium.

Officials from Chevron weren't immediately available to comment about Chavez' announcement.

The other block, Carabobo 1, was awarded to Spain's Repsol YPF SA (REP, REP.MC), India's Oil & Natural Gas Corp. (500312.BY), Malaysia's Petroliam Nasional Bhd and some smaller firms from India.

That consortium would have to pay a $1.05 billion initial payment.

The "investments of $40 billion" that Chavez would be referring to in his Twitter message could be the expected drilling and production costs over many years, including plans to build upgraders that can convert the heavy oil into lighter, more marketable fuel.

Chavez opened his Twitter account last month and has attracted more than 250,000 followers, making him Latin America's most-tracked leader. He has begun to use the account to make government announcements, and said Sunday he was setting up a special office with 200 staff and public funds to help manage the popular account.

Chavez' Twitter account is under the profile @chavezcandanga.

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