Venezuela's Chavez Offers Malaysia Oil Exploration Stake

CARACAS, Dec 19, 2006 (AP)

Venezuela is ready to jointly explore for oil with Malaysia and help it boost its reserves, President Hugo Chavez said Tuesday.

"We can help over there too. We can explore in Malaysia," Chavez told visiting Malaysian Prime Minister Abdullah Ahmad Badawi while touring an oil refinery in eastern Venezuela.

Chavez has already invited Malaysia's state oil and gas company Petroliam Nasional Bhd., or Petronas, to participate in oil projects in Venezuela - home to the largest crude reserves outside of the Middle East.

On Tuesday, Chavez said Venezuela could help Malaysia look for new crude reserves and receive assistance in developing palm oil, which can be used as a biofuel.

"I know Malaysia has a good reserve of oil," but at its current pace of production, those reserves will last no more than 20 years, Chavez said. "We modestly offer all the help we can to Malaysia."

Venezuela is aggressively seeking to develop vast deposits of heavy oil in its Orinoco River region. The dark, tar-like crude was once considered too costly and difficult to produce. However, new technologies to upgrade it into lighter, more marketable products, combined with higher oil prices, have made it increasingly attractive.

Venezuela believes that once it quantifies and certifies the Orinoco's heavy oil deposits, it could become home to the largest crude reserves in the world. State oil company Petroleos de Venezuela SA is working with counterparts from friendly allies, such as Iran, Russia, China and India in the certification process.

Venezuela has invited Malaysia to join those companies.

Chavez visited Malaysia in August and has sought closer ties with the predominantly Muslim country, which leads the 56-nation Organization of the Islamic Conference.

The two governments are expected to sign a series of oil and other cooperative accords later Tuesday, including one to study the possibility of jointly building a refinery in Malaysia.

Abdullah, who is on a two-day visit with a delegation of businessmen seeking investment opportunities in Venezuela, is set to leave Tuesday evening.

Copyright (c) 2006 Dow Jones & Company, Inc.