ONGC, PDVSA Discuss Opportunities in Venezuela

In what is being seen as a significant development in energy cooperation between India and OPEC member Venezuela, a high-level delegation of the Petroleos de Venezuela S.A. (PDVSA) visited ONGC in New Delhi on August 3, 2006. The PDVSA officials reportedly had "very fruitful" discussions with top executives of ONGC and its overseas arm, ONGC Videsh (OVL). on the business opportunities OVL is pursuing in Venezuela.

The delegation was led by Luis Vierma Pérez, PDVSA's vice president and Venezuela's former deputy minister of energy. Accompanying him was Eulogio Del Pino, president of CVP and director of PDVSA. Milena Santana Ramirez, Ambassador of Venezuela in India, also joined the delegation during the meeting.

In his opening remarks, Vierma discussed the excellent relationship Venezuela enjoys with India and expressed his satisfaction on the growing business relationship that is developing into partnership in many areas. He expressed that India, with very high potential for growth and Venezuela's vast oil reserves, will provide a win-win situation to both the countries: India could meet its energy requirements and Venezuela could benefit from India's wealth of expertise in terms of engineering skills, human resource, and offshore and other spheres of oil exploration and production.

Vierma also noted that Venezuela has special regard for the rich cultural heritage of India and would like to benefit from India's status on the world stage, along with its regional leadership position.

Apart from discussing the ongoing business opportunities in Venezuela, a detailed presentation was made by a team of officers from ONGC's Mumbai-based Engineering Services division, led by V.K. Khanna and Anil Kumar. During the subsequent deliberation it was proposed that a joint team of PDVSA and ONGC be constituted to study and explore the possibility of forming a PDVSA / ONGC joint venture with assistance and guidance from ONGC Engineering Services.

Meeting attendees sat through a brief presentation covering various new technologies adopted by ONGC and the advances ONGC has made in the recent years in high-technology drilling operations--especially horizontal wells, multi lateral wells, use of new technology, a non-damaging mud system, the capability to drill through any formation, and highly deviated ERD wells. The presentation was followed by a very detailed presentation on ONGC's human resource development and skill upgradation programs.

The delegation expressed its appreciation for the excellent human resources model being adopted by the company and desired to form an umbrella MOU with ONGC for skill development covering all aspects of E&P and technology cooperation. It was also decided to hold biannual technical workshops on exchange of knowledge, especially in the areas of advanced drilling technology alternatively in India and Venezuela. The first such workshop is scheduled for November 2006 in India. A second one would be planned for March 2007 in Venezuela.

The Venezuelan side also proposed that both ONGC and PDVSA should explore the possibility of sourcing of Venezuelan crude on a long-term basis and synergizing the same with Indian refining capacity with access to vast Indian and Asia pacific markets. Both sides agreed to set up a joint group to study and propose a suitable mechanism for collaboration in this area.

The recommendation arising of the meeting and identification of areas of collaboration will be further discussed during a visit to India later this month by Venezuela's energy minister.

ONGC is one of the few multinational companies invited by Venezuela's government to participate in the biggest-ever reserve quantification and certification project in Orinoco heavy oil belt, along with other companies. After the quantification and certification project, Venezuela is expected to emerge as world leader in terms of reserves.

ONGC Videsh is aggressively pursuing opportunities in Venezuela, and this meeting holds special importance.