Skip to comments.Venezuela, China sign 16 bln dlr oil deal
Posted on 09/16/2009 6:51:49 PM PDT by NormsRevenge
NAIGUATA, Venezuela (AFP) Venezuelan President Hugo Chavez announced a 16-billion-dollar 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 16 billion dollars 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 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 20 billion dollars 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 also expected to produce 450,000 barrels a day by 2012, Chavez said.
(Excerpt) Read more at news.yahoo.com ...
Venezuela's President Hugo Chavez unveiled a 16-billion-dollar deal with China to drill for oil in the resource-rich Orinoco basin. Oil-rich Venezuela claims current proven reserves of some 142.3 billion barrels, but Venezuelan experts believe the Orinoco basin could hold an additional 235 billion barrels. (AFP/Juan Barreto)
I cannot help but suspect that this is just the latest example of the long-suffering Venezuelans getting the short end of the stick.
Venezuelan President Hugo Chavez (L) hugs Russian Premier Vladimir Putin at Novo-Ogaryovo outside Moscow last week. Venezuela says it has obtained $2.2 billion in credit from Russia to purchase nearly 100 T72 tanks and a series of anti-aircraft rocket systems from its strategic ally. (AFP/File/Alexander Nemenov)
Nothing new. China has signed contracts for big things with Hugo and Fidel and Akmadinajad and others before.
It pays for them and it takes a swipe at the US. They’re happy.
And guess where they got the money?????? The IMF...
I seem to recall reading somewhere that Venezuela produces a nasty, sulfurous crude, that requires special handling in the process of refining. Anyone know if that’s correct?
Who is they?
True. heavy crude versus light crude
Venezuela is only about 5 days away from the U.S. Gulf Coast by tanker. Most of the Venezuelan crude oil used in the United States is heavy, sour quality crude oil, 2 and other nearby sources of similar crude oil, such as Mexico, have little additional capacity to increase supply in the short term. Crude oils from sources somewhat farther away, such as West Africa or the North Sea, are mostly lighter and more expensive than the lost Venezuelan volumes. When the heavier Venezuelan supply was disrupted, these lighter crude oils may not have been economically attractive to refiners previously using the Venezuelan crude oils. While refineries using heavy Venezuelan crude oils theoretically can use some lighter crude oils from areas like West Africa, their refineries are designed to run most economically with the heavier crude oils.
The largest number of refineries in the United States can process light, sweet crude oils, while only the small fraction of refineries that have extensive desulfurization and bottoms-conversion units can use heavy, high sulfur crude oils such as that produced in Venezuela. Refineries that normally run intermediate sour crude oil could run a small quantity of heavy sour crude if they could blend it with light sweet crude oil, but if light sweet crude oil is in short supply, then that option is not available. When a heavy sour production source is disrupted, refiners can run a lighter mix of crude oils, but as in the recent Venezuelan production loss, refiners shift crude oils so that the heavy crude oil refiners still run a relatively heavier mix. Both acquisition of additional crude oils and the shifting takes time, and runs will generally be reduced for a short time.
Drill HERE. Drill NOW.
Good luck refining that Venezuelan tar they call oil.