OVL joins hands with Petronas and Repsol for Venezuelan fields

Oil and Natural Gas Corporation (ONGC) has replaced Reliance Industries Ltd (RIL) with Repsol-YPF, Spain's biggest oil company, and Malaysia's Petronas to bid for Venezuelan oil blocks in January.
ONGC Videsh Ltd (OVL), the overseas investment arm of state-run explorer, is likely to bid for the massive Carabobo project in Venezuela's Orinoco heavy oil belt with Repsol, Petronas, Indian Oil Corporation (IOC) and Oil India Ltd (OIL), sources said.

The Latin American nation is offering a maximum of 40 % stake in the development of oilfields in the Orinoco Belt and the rest would be held by Venezuela' state oil company, Petroleos de Venezuela SA, or PdVSA. Sources said Repsol and Petronas will hold 25 % interest, while OVL would hold 10.1 %. IOC and OIL would have 2.45 % apiece.
Originally, OVL-IOC-OIL were to bid for one of the three giant blocks being offered with Reliance but the Mukesh Ambani-run company in August walked out of the consortium, possibly because of delays in the bidding.

Originally, OVL and Reliance were to equally divide 32-33 % stake leaving the rest for IOC and OIL. OVL already has a 40 % stake in the 40,000 bpd San Cristobal oilfield in Venezuela.
Sources said 19 companies have shown interest in the tender for the Carabobo Project that aims to build three upgraders to turn the Orinoco belt's tar-like crude into oil for exports and produce around 200,000 bpd (10 mm tpy), with the initial investment seen between $ 10 bn and $ 20 bn per area.

A partnership between state-run China National Petroleum Corp and France's Total is on the table along with another between CNPC and refiner Sinopec, Chevron would partner three Japanese companies and Venezuelan Suelopetrol.
The Portuguese Galp Energia is negotiating a partnership with Norway's Statoil. Petrobras of Brazil may be part of that partnership. Royal Dutch Shell, BP and Colombia's Ecopetrol are among the other notable interested bidders.

Repsol has shortlisted Carabobo Norte I area but this location has not yet been finalised within the OVL-IOC-OIL consortium, the sources said. The fields would produce tar-like oil, which would need to be upgraded to higher-quality synthetic crude. The upgraders are likely to cost $ 6-7 bn.
The companies must also pay a one-off premium of between $ 500 mm and $ 1 bn to operate the projects, along with royalties and taxes.

Venezuela has carved out seven heavy oil Carabobo blocks in the Orinoco belt that contain 272 bn barrels of oil. About 10 to 20 % of these can be recovered.
The seven blocks would eventually produce 1.2 mm bpd of oil.