OVL enters agreement to develop oilfield

New Delhi: ONGC Videsh Ltd (OVL) has signed a joint venture agreement with Petroleos de Venezuela S.A. (PDVSA) to take 40 per cent participating interest in the San Cristobal oilfield in Venezuela.

The agreement between the overseas investment arm of ONGC and PDVSA was signed. The Venezuelan company will retain remaining 60 per cent in the oilfield in Junin, Orinoco Region of Venezuela.

The joint venture agreement was concluded at a ceremony in Venezuela in the presence of Mr Murli Deora, Minister of Petroleum & Natural Gas, and Mr Rafael Ramirez Carreno, Minister of Energy and Petroleum of Venezuela, an official statement said.

The two companies will jointly develop the field from its current production level of 20,000 bbl per day to 40,000 bbl per day. OVL’s participation in the project with an investment of $356 million including the signature bonus of $174 million and capex of $182 million was recently approved by the Union Cabinet.

Speaking on the occasion, Mr Deora expressed hope that this venture will pave way for more such mutually beneficial projects between the two countries. The San Cristobal project is located in the Zuata Subdivision of Orinoco Heavy Oil belt, in the Junin Norte Block in eastern Venezuela.

This joint venture will also explore the potential of discovering more hydrocarbons in the unexplored area of the project, the statement said. In addition, the venture will also explore employing enhanced oil recovery (EOR) techniques to improve oil recovery rate in the field. The EOR techniques have been successfully commercialised by ONGC in its western heavy field in India.

The Orinoco heavy oil belt holds one of the largest known accumulations of heavy oil in the world, covering an area of about 54,000 square km. OVL has also entered into a Technological Cooperation Agreement with PDVSA CVP for joint research and training activities.

Earlier, Mr Deora had an important bilateral meeting with his counterpart from Venezuela. Venezuela is one of the largest oil producing countries in the world, with about 87 billion barrels of proven conventional oil reserves (OPEC 2006). In addition, it has a huge non-conventional oil deposits (heavy oil). Most of the deposits are located in the Orinoco oil belt.