Venezuela announces new Faja heavy oil fields auction

Venezuela’s Hydrocarbons Vice Minister Luis Felipe Vierma said that the country plans to set up a new international auction round for exploration and production partnerships in the Orinoco extra heavy oil areas, "Faja", under the new hydrocarbons legislation.
Vierma said at the side lines of a Venezuela’s Alianza Petrolera seminar "Opportunities for Hydrocarbon Investments in Venezuela" in Caracas that the bidders will have to form joint ventures with Venezuela’s oil company PdVSA, which would hold 51 % of the shares. A specs for the auction should be ready "shortly”, Vierma said.

"I think that soon we are going to have a presentation for companies that want to participate to explain the methodology," Vierma told. Venezuela is counting on foreign oil companies to develop the Faja extra heavy crude reserves.
"If we want these projects to be up and running in five to six years, we have to start talking about them now," Vierma said. Companies that are in the Faja at the present like Total and Statoil, ConocoPhillips have already expressed an interest in the new bidding round, Vierma said.

Venezuela’s new hydrocarbons law said that new ventures would have to pay a 30 % royalty as stipulated by the new law, instead of the old established royalties and taxes. The four heavy oil projects that already exist were signed in the 1990s and they negotiated incentives such as a nine-year 1 % tax.
Venezuela's three operating Faja heavy oil projects: Sincor, Cerro Negro, and Petrozuata, are currently pumping around 450,000 bpd of synthetic crude. The last project, Hamaca, will be completed this year and is producing around 160,000 bpd of extra heavy oil blended with lighter crude. Vierma announced that Hamaca is at the present negotiating an increase of 40.000 bpd in its capacity under the new legislation.

The four existing Faja projects pump extra heavy crude from the Orinoco belt to Jose complex at the Anzoategui state Caribbean coast and upgrade it to a synthetic crude. Petroleos de Venezuela forecasts production of 620,000 bpd by 2009.
Companies operating at the present Faja projects and are partnered with PdVSA are ExxonMobil at Cerro Negro, ChevronTexaco at Petrozuata, ConocoPhillips at Petrozuata and Hamaca, and Statoil and Total at Sincor