Japan and Venezuela sign Orinoco oil cooperation deal

Mar 19, 2009 01:00 AM

Japan and Venezuela agreed to a comprehensive energy cooperation pact, paving the way for Japanese enterprises such as Inpex to tap oil reserves in the South American nation's Orinoco Delta area.
Toshihiro Nikai, Japan's trade minister, and Venezuelan Oil and Energy Minister Rafael Ramirez signed an initial agreement in Tokyo, said Shin Hosaka, director of the oil and gas division at the Japanese ministry. Under the accord, the nations will jointly develop projects ranging from oil exploration to refinery and petrochemical-plant expansion, he said.

The agreement comes as Venezuela, the fourth-biggest supplier of oil to the US, plans to invest $ 79 bn in the Orinoco Delta region to develop part of reserves estimated at 316 bn barrels. Japan wants to improve ties with the South American nation to diversify its oil supply and cut its reliance on the Middle East.
"Orinoco oil and natural-gas reserves in Venezuela are our main interests," Hosaka said. "Venezuela seems to be determined to diversify their energy sales" away from the US. Venezuelan President Hugo Chavez will visit Japan on April 6, Ramirez said. It will be Chavez's second visit to Japan since becoming president.

Orinoco financing
Petroleos de Venezuela, the state oil company known as PdVSA, is looking for financing of as much as $ 18 bn from Asian nations including China and Japan, Ramirez said earlier. Venezuela wants foreign companies to invest in three Orinoco projects to produce a combined 1.2 mm bpd of crude. The Energy Ministry aims to more than triple oil output in the area to 3 mm bpd by 2020 from 800,000 barrels now.
Oil output in Venezuela, a member of the Organization of Petroleum Exporting Countries, has dropped 31 % since 2001 because of cuts in OPEC quotas and the firing of thousands of oil company workers to end an industry strike in 2002.

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