INDIA, VENEZUELA SIGN A LANDMARK OIL SECTOR COOPERATION AGREEMENT

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ONGC Videsh Limited (OVL) and Petroleos De Venezuela S.A. (PDVSA) signed in Caracas, Venezuela on April 8, 2008 (India time late night yesterday) a Joint Venture agreement for the San Cristobal Field in Junin, Orinoco Region of Venezuela. This JV agreement was concluded at an impressive ceremony in the presence of Mr. Murli Deora, Minister of Petroleum & Natural Gas of India and Mr. Rafael Ramirez Carreno, Minister of Energy and Petroleum of Venezuela. OVL is a 100% subsidiary of India’s leading national oil company ONGC. Under this joint venture, OVL will have a participating interest of 40%, while PDVSA retains the remaining 60% in the San Cristobal Field in Junin, Orinoco Region of Venezuela. They will jointly develop the field from its current production level of 20,000 bbl per day to 40,000 bbl per day. Government of India has recently approved OVL’s participation in the project with an investment of US$ 356 million.

Speaking on the occasion Mr. Deora described the event as a historic milestone in growing cooperation between India and Venezuela in the hydrocarbon sector. He expressed hope that this JV will pave way for more such mutually beneficial projects between the two countries. Today’s signing fructifies the consistent efforts on part of India’s Ministry of Petroleum & Natural Gas to take forward relations between India and Venezuela. It may be mentioned that during the visit of President Hugo Chavez to New Delhi in March 5, 2005, an Agreement for Cooperation in the hydrocarbon sector was signed between India and Venezuela. Further, to strengthen the cooperation between OVL and PDVSA, a Memorandum of Understanding (MOU) was also signed the same day to jointly develop oil & gas exploration and production projects.

San Cristobal project is located in the Zuata Subdivision of proliferous Orinoco Heavy Oil belt, in the Junin Norte Block in eastern Venezuela. The Orinoco heavy oil belt holds one of the largest known accumulations of heavy oil in the world, covering an area of about 54,000 square km, 600 km in length in E-W and about 90 km width in N-S. Oficina formation (Middle Miocene) is the main reservoir, which occurs between a depth of 600 and 1,100 m.

This Joint Venture will also explore the potential of discovering more hydrocarbons in the unexplored area of the project. In addition, the JV will also explore employing Enhanced Oil Recovery (EOR) techniques to improve oil recovery rate in the field. The EOR techniques have been successfully commercialized by ONGC in its western heavy field in India.

Venezuela is one of the largest oil producing countries in the world, with about 87 billion barrels of proven conventional oil reserves (OPEC 2006). In addition, it has a huge non-conventional oil deposits (heavy oil). Most of these deposits are located in the Orinoco oil belt.

The participation of OVL in the San Cristobal project is expected to open more avenues for bilateral cooperation. OVL has also entered into a Technological Cooperation Agreement with PDVSA CVP for joint research and training activities. Under this Agreement ONGC has trained a batch of drilling engineers from PDVSA through a customized 25-week long course. This, for the first time, covered the deep sea operations of ONGC. The training was imparted at ONGC’s premier training institute at Dehradun.

Earlier Shri Deora had an important bilateral meeting with his counterpart from Venezuela. The meeting lasted for more than an hour, in which the two Ministers discussed possibilities of further cooperation in upstream activities, refinery projects, gas transportation and distribution, technical services including providing training to more oil & gas personnel of Venezuela, etc. Petroleum Secretary Shri M S Srinivasan, Ambassador of India to Venezuela Shri Y. K. Sinha, CMD ONGC Shri R S Sharma and MD OVL Shri R S Butola also attended from Indian side.

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