PdVSA, Eni Near Orinoco Production Deal

CARACAS (Dow Jones)

State-owned Petroleos de Venezuela, or PdVSA, and Italy-based Eni S.p.A. (E) are finalizing plans for a joint venture that would start producing heavy crude oil in Venezuela's Orinoco region in 2014.

In a statement late Wednesday, PdVSA said its president Rafael Ramirez and Eni chief Paolo Scaroni on Monday agreed to the main terms for a deal, and said that once the boards of both companies approve it, then a final deal will be struck Jan. 26 in Venezuela.

Like most PdVSA bilateral deals, PdVSA will control 60% of the joint venture while Eni will have the other 40%. The block covers 424 square kilometers.

Construction would begin in 2011 with production kicking off in 2014 at an estimated 75,000 barrels a day. Additional construction will eventually allow for production to rise to 240,000 barrels a day. There are also plans for the joint venture to build a refinery, but no date on that was mentioned.

"This deal is the result of two years of continuous work between PdVSA and Eni," Eni's Scaroni was quoted as saying, in the statement.

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