Russian oil companies plan to invest $17.6 billion in Venezuela by 2019 and quadruple energy output in an attempt to expand cooperation to offshore areas and oil services, according to a Reuters report.
The strengthening of the Russia-Venezuela energy relationship was underlined last week when Rosneft (MCX:ROSN), one of Russia's largest state-run producers, signed a preliminary agreement for the Mariscal Sucre gas project off the east coast of Venezuela. Rosneft will be granted development rights to Venezuela's Rio Caribe and Mejillones fields, which are part of the long-delayed, 14.7-trillion-cubic-foot (Tcf) Mariscal Sucre project, said Reuters.
A long time comingSector leaders have been breathing sighs of relief at finally obtaining backing for the project, which has been subject to continuous delays due to a lack of investors; pricing issues and industry fears of expropriation have, until now, made it difficult for state oil company Petroleos de Venezuela (PDVSA) to attract experienced partners. The sinking of a $200-million exploration rig in May 2010 also impeded the project, Reuters notes. The agreement has been in progress for some time. Venezuela entered a joint venture (JV) aimed at replacing oil-focused investment from private backers engaged in bilateral deals with allied governments, including China and Russia, with Russian banks in 2011. Now, Venezuelan Oil Minister Rafael Ramirez has confirmed that projects with Russian firms will account for 930,000 barrels a day by 2019 — four times the current volume — while Rosneft CEO Igor Sechin said the company will finance production with loans from Russian banks and credit lines from international banks. Ramirez noted that Rosneft will assume leadership of the Russian consortium that is developing the heavy oil Junin 6 block after buying out the stake held by Surgutneftegaz (MCX:SNGS), while PDVSA will continue to operate the block with a 60-percent stake. He added that following a model established by Chinese oil companies, PDVSA will also create a joint company with Russian partners to assemble drilling rigs in Venezuela.