Oil and Natural Gas Corporation (ONGC) has replaced Reliance Industries Ltd (RIL) with Repsol YPF SA, Spain’s biggest oil company, and Malaysia’s Petronas to bid for Venezuelan oil blocks next month.
ONGC Videsh Ltd (OVL), the overseas investment arm of state-run explorer, is likely to bid for the massive Carabobo project in Venezuela’s Orinoco heavy oil belt with Repsol, Petronas, Indian Oil Corporation (IOC) and Oil India Ltd, sources in know said.
The Latin American nation is offering a maximum of 40 per cent stake in the development of oilfields in the Orinoco Belt and the rest would be held by Venezuela’ state oil company, Petroleos de Venezuela SA, or PdVSA.
Sources said Repsol and Petronas will hold 25 per cent interest, while OVL would hold 10.1 per cent. IOC and OIL would have 2.45 per cent apiece.
Originally, OVL-IOC-OIL were to bid for one of the three giant blocks being offered with Reliance but the Mukesh Ambani-run company in August walked out of the consortium, possibly because of delays in the bidding.
Venezuela is likely to announce winners of the three blocks on January 28 — the same day it opens bids, they said.
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Originally, OVL and Reliance were to equally divide 32-33 per cent stake leaving the rest for IOC and OIL.
OVL already has a 40 per cent stake in the 40,000 barrels per day San Cristobal oilfield in Venezuela.
Sources said 19 companies have shown interest in the tender for the Carabobo Project that aims to build three upgraders to turn the Orinoco belt’s tar-like crude into oil for exports and produce around 200,000 barrels per day (10 million tonnes a year), with the initial investment seen between $10 billion and $20 billion per area.
A partnership between state-run China National Petroleum Corp and France’s Total SA is on the table along with another between CNPC and refiner Sinopec Corp. Chevron Corp would partner three Japanese companies and Venezuelan Suelopetrol.
The Portuguese Galp Energia is negotiating a partnership with Norway’s Statoil. Petrobras of Brazil may be part of that partnership. Royal Dutch Shell Plc, BP Plc and Colombia’s Ecopetrol are among the other notable interested bidders.
Repsol has shortlisted Carabobo Norte I area but this location has not yet been finalised within the OVL-IOC-OIL consortium, the sources said.
The fields would produce tar-like oil, which would need to be upgraded to higher-quality synthetic crude. The upgraders are likely to cost $6-7 billion.
The companies must also pay a one-off premium of between $500 million and $1 billion to operate the projects, along with royalties and taxes.
Venezuela has carved out seven heavy oil Carabobo blocks in the Orinoco belt that contain 272 billion barrels of oil. About 10 to 20 per cent of these can be recovered. The seven blocks would eventually produce 1.2 million barrels per day of oil.