Orinoco Oil Reserves Total 513B Barrels

(Dow Jones), Jan. 22, 2010

The U.S. Geological Service said Friday that Venezuela's oil-rich Orinoco Belt holds 513 billion barrels of recoverable oil -- far more reserves than originally estimated.

The assessment, the U.S. government agency says, is the first to identify how much oil is technically recoverable using currently available technologies and methods. Previous projections estimated the quantity of available reserves in the area, located in eastern Venezuela, at between 230 billion to 300 billion barrels of heavy oil.

The area contains "the largest accumulation ever assessed" by the U.S. Geologic Service, the agency said.

The news enhances the profile of Venezuela's oilpatch at a time when large, easy-to-access oil deposits are becoming scarce and big oil producing companies are scrambling to replace their dwindling output and reserves.

The Orinoco Belt is key to Venezuela's energy policy. It is at the center both of ambitious oil projects and legal disputes between the Venezuelan state oil company and former partners.

Oil companies from around the globe are lining up to participate in the Carabobo oil drilling project, which seeks to open-up untapped fields of tar-like crude in the eastern Orinoco region. This is the most touted drilling project in the region since the 1990s, when oil companies such as ConocoPhillips (COP), Total S.A. (TOT), Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) built massive extraction and upgrading projects in the area.

The initial opening of the Orinoco oil belt resulted in a major production boost in the region, but ended in legal controversy, when state-owned Petroleos de Venezuela S.A. took over control of the projects in 2007 under a new hydrocarbons law. ExxonMobil and ConocoPhillips left, starting arbitration proceedings against the country. Chevron, Total and other international companies stayed.

Companies that in recent months have shown interest in making a bid for the Carabobo project include China National Petroleum Corp., or CNPC, Total, Spain's Repsol YPF SA (REP, REP.MC), Royal Dutch Shell PLC (RDSA, RDSA.LN) and India's Oil & Natural Gas Corp., or ONGC (500312.BY).

Analysts say many foreign oil firms are willing to overlook the many political or operational risks related to dealing with Chavez' socialist government because the geological risk in the country is virtually nil.

Copyright (c) 2010 Dow Jones & Company, Inc.