PdVSA and ENI to spend $ 18 bn to pump and refine oil

ENI, Italy's biggest oil company, and Petroleos de Venezuela (PdVSA), the South American country's state-owned oil company, agreed to develop almost $ 18 bn worth of projects to pump and refine oil in Venezuela.
The companies' joint venture will start producing crude in the Orinoco Belt in central Venezuela, Oil and Energy Minister Rafael Ramirez said at a ceremony attended by Venezuelan President Hugo Chavez and ENI Chief Executive Officer Paolo Scaroni.

The venture expects to pump 240,000 bpd after spending $ 8.3 bn to develop the Junin 5 block, Ramirez said. First oil will be pumped in 2013, ENI said. It will reach full production in 2016, Scaroni said.
"That gigantic oil reserve -- it could not be exploited by Venezuela alone," Chavez said, referring to the roughly 235 bn barrels of reserves in the Orinoco Belt. "Foreign investment is absolutely necessary."

Rome-based ENI is seeking oil projects abroad to maintain output. Venezuela, to make up for declining production in its agingLake Maracaibo fields, is inviting foreign companies to become minority partners in the Orinoco. ENI also plans to build a $ 9.3 bn, 350,000 bpd refinery to convert crude oil from the existing Petromonagas project in the Orinoco into higher-value products, Ramirez said.
ENI will pay a $ 646 mm signing fee, the company said. It will pay $ 300 mm when the development joint venture is formed and the remainder will be paid later.

International arbitration
ENI will hold 40 % of the venture. PdVSA will own the rest.
ENI was granted access to the Orinoco after dropping an international arbitration case against Venezuela in 2008 over an oil field nationalization. US oil companies ExxonMobil and ConocoPhillips continue to pursue arbitration against Venezuela for seizing operations of Orinoco Belt projects that began in the 1990s.

Venezuela expects to complete joint venture agreements with Chinese and Russian companies "soon" and to complete bidding for three projects in the Carabobo blocks, Ramirez said.
ENI also signed a memorandum of understanding to build a 1-GW power plant to be powered by natural gas from the Delta Caribe Oriental offshore fields, Ramirez said.