According to a report from Reuters, Venezuela is going to award major Orinoco oil belt fields today in the Carabobo oil tender. This is the largest oil investment opportunity for outside oil and gas companies since President Hugo Chavez took power 11 years ago, and it comes on the heals of the nationalization of Venezuelan fields just three years ago.
Carabobo Oil Tender
The Carabobo oil tender offers three projects, which are estimated to produce 400,000 barrels of oil per day, with production start-up slated for 2012 and 2013.
Alongside the Orinoco heavy oil opportunities, Venezuela is offering exploration and production blocks in the Junin area to a select few.
Furthermore, multibillion-dollar upgraders will be built by 2016 to process the heavy oil into light synthetic crude.
Following years of dwindling oil production rates in Venezuela, the new production from these projects may not be enough to buoy production numbers from aging fields. Venezuela has been hard-hit by falling petroleum prices, prompting another look at allowing outside companies to invest in its rich resources.
VenezuelPetroleum Resources Outweigh Risks
The bidding for Orinoco heavy oil fields is expected to draw billions of dollars for the oil-revenue-dependent OPEC country, despite the country’s recent nationalization of resources.
Companies rumored to be bidding on the Venezuelan oil opportunities include American Chevron, Spanish Repsol, Italian Eni, Indian ONGC, Chinese CNPC, and Russian Lukoil and Gazprom.
The massive reserves in Venezuela have outweighed the underlying risks involved in bringing this oil into production, including non-existent and aging infrastructure, as well as the potential for Chavez to re-nationalize the industry once production has been established.
Bid winners are scheduled to be announced tonight from the Miraflores presidential palace in Caracas.