Japanese Cos Still Eyeing Venezuela's Carabobo Oil Bidding

CARACAS (Dow Jones Newswires), Jul. 29, 2009

Japanese firms still aim to take part in Venezuela's Carabobo auction for rights to drill in blocks of extra-heavy crude, an official from Japan said one day after the auction was postponed indefinitely.

"In (Venezuela's eastern) Orinoco belt, Japanese companies are interested in participating in the Carabobo bidding," Toru Ishida, director-general of the Japanese Agency for Natural Resources and Energy, said Tuesday night during a visit to Caracas.

He did not name the companies.

Venezuelan Oil Minister Rafael Ramirez said Monday the deadline for presenting final bids for Carabobo, which had been set for Tuesday, was being pushed back because oil companies asked for more time to analyze the situation. No new deadline has been set, Ramirez said.

Observers say generally lower oil prices and Venezuela's tricky regulatory environment amid President Hugo Chavez' socialism push are making oil firms reluctant to make strong bids for the project, which is likely causing the delays. Still, the four fields on the auction block could each yield up to 200,000 barrels a day of tar-like crude, which would be processed in upgrading facilities.

More than a dozen foreign firms including those in Japan have expressed interest in the auction over the past several months. It's the first major investment opportunity for foreign oil firms in Venezuela in years.

President Hugo Chavez, listening to Ishida's comments on the oil bidding, responded: "We want you (Japan) to participate in the bidding for the Carabobo blocks."

Japan and Venezuela are also planning a joint venture to develop an oil block in the Orinoco region that's not part of the Carabobo bidding. He said the plans could be finanlized near the end of the year, Venezuela's Ramirez said Tuesday.

Furthermore, Chavez recalled that Japan's government has signed several agreements with Venezuela over the past year to provide financing for oil and gas projects. He said a $1 billion financing deal from Japan will go toward a cryogenic gas plant in western Venezuela.

The Japan Bank for International Cooperation, of JBIC, is involved in some of the financing projects, he said.

Chavez also said Venezuela has supplied more than 1 million barrels of crude or crude products to Japan so far this year.  

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