Rosneft Agrees Venezuela Deal for Orinoco Oil Project

March 20, 2013

Russian state oil firm Rosneft and Venezuela’s PDVSA (Petróleos de Venezuela S.A.) have agreed to form a partnership to exploit an oilfield with estimated reserves of 40 billion barrels, strengthening the alliance between the two countries, according to a report by Inter Press Reports (IPS).

For 1.5 billion dollars, the Russian company will take over 40 percent of a project at a Venezuelan deposit expected to produce 400,000 barrels per day (bpd) of crude in five years’ time, executives from the two companies said.

“It is an attractive deal for Rosneft to buy, or gain access to, reserves at a very low price. That 40 percent interest ‘buys’ 16 billion barrels at a cost of 10 cents of a dollar per barrel,” Víctor Poleo, a professor of graduate studies in oil economics at the Central University of Venezuela, told IPS.

The crude in question is in the Orinoco oil belt, an area of 55,000 square kilometres in the southeast of Venezuela which is estimated to contain reserves of 1.2 trillion barrels, of which 240 billion barrels are technically recoverable, according to the Ministry of Petroleum and Mining.

Russian state oil firm Rosneft and Venezuela’s PDVSA (Petróleos de Venezuela S.A.) have agreed to form a partnership to exploit an oilfield with estimated reserves of 40 billion barrels, strengthening the alliance between the two countries.

For 1.5 billion dollars, the Russian company will take over 40 percent of a project at a Venezuelan deposit expected to produce 400,000 barrels per day (bpd) of crude in five years’ time, executives from the two companies said.

“It is an attractive deal for Rosneft to buy, or gain access to, reserves at a very low price. That 40 percent interest ‘buys’ 16 billion barrels at a cost of 10 cents of a dollar per barrel,” Víctor Poleo, a professor of graduate studies in oil economics at the Central University of Venezuela, told IPS.

The crude in question is in the Orinoco oil belt, an area of 55,000 square kilometres in the southeast of Venezuela which is estimated to contain reserves of 1.2 trillion barrels, of which 240 billion barrels are technically recoverable, according to the Ministry of Petroleum and Mining, IPS reports.

“Rosneft’s agreements with PDVSA are part of Russia’s projection towards Latin America, a region that has traditionally been in the sphere of influence of the United States,” said Kenneth Ramírez, an expert on oil geopolitics and president of the private Venezuelan Council of International Relations.

This projection is part of “Russia’s grand strategy to re-emerge as a global power and replicate the advance of Washington over what was once its zone of influence, in central and southern Asia, the Caucasus, the Balkans and the Black Sea,” he told IPS.

Russian President Vladimir Putin sent the head of Rosneft, Igor Sechin, as his special representative to the state funeral for Chávez on Mar. 8.

Sechin met with Nicolás Maduro, the acting president of Venezuela and the candidate expected to win the Apr. 14 elections,