Venezuelan President Hugo Chavez on Wednesday announced a US$16 billion deal with China to drill for oil in the resource-rich Orinoco basin.
“Yesterday [Tuesday], a deal was signed in Beijing for the Orinoco basin. It sets out a Chinese investment of US$16 billion over the next three years,” Chavez said at a public event.
He gave few details of the pact and did not name the Chinese companies involved, but said they would form a joint venture with state-owned Petroleos de Venezuela (PDVSA) to produce 450,000 barrels a day of extra heavy crude.
Venezuela, a founding member of the oil cartel OPEC and Latin America’s top oil exporter, announced on Saturday that it had signed a similar accord with a Russian consortium.
The deal will see the group of five Russian companies invest more than US$20 billion over three years, and gives them rights to drill for oil in the part of the Orinoco oil belt.
PDVSA said production with the Russian companies on the massive Junin 6 heavy crude block would begin by 2012. Junin 6 is estimated to hold 53 billion barrels of heavy crude, making it one of the world’s largest reserves.
That joint venture — with the Russian companies Rosneft, Lukoil, Gazprom, TNK-BP and Surgutneftegaz — is expected to produce 450,000 barrels a day by 2012, Chavez said.
Chavez on hailed the two deals saying the total would boost production by 900,000 barrels a day, which would be marketed along with Russian and Chinese companies.
“In addition, there will be a flood of technology into the country, with China going to build drilling platforms, oil rigs, railroads, houses,” Chavez said.
Chavez said that during his recent visit to Moscow he signed the venture that would give PDVSA a 60 percent stake in the firm, with 40 percent to the consortium.
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