Indian flagship overseas explorer ONGC Videsh Ltd and its partners have signed an agreement to develop a USD 20 billion oil project in Venezuela that will give energy deficient India 3.6 million tonnes a year of crude.

On May 12, OVL and its partners inked an agreement with Venezuelan national oil firm Petroleos de Venezuela SA for the development and production of hydrocarbons from the Carabobo project in the Orinoco region of Venezuela.

The joint venture agreement was signed in Caracas at a ceremony attended by Mr Hugo Chavez Frias president of Venezuela.

Spain's Repsol-YPF SA, Petroliam Nasional Bhd of Malaysia and OVL, the overseas investment arm of state run Oil and Natural Gas Corp each hold an 11% stake in the consortium that will produce 400,000 barrels of oil per day.

Indian Oil Corp and Oil India will each have 3.5% interest in the joint venture firm to develop the Carabobo 1 Norte and Carabobo 1 Centro blocks located in the Orino Heavy Oil Belt.

The Corporacion Venezolana del Petroleo a unit of PdV, Venezuela's state oil company, will hold the remaining 60 per cent equity. About half of the production from the joint venture, called PetroCarabobo SA, will be upgraded into light crude oil for export.

The project costs are estimated at USD 15 billion to USD 20 billion and is one of India's major investments in Latin America. The joint venture company has a licence term of 25 years, with the potential for a further 15 year extension, to extract oil.
The Indian firms will invest USD 2.181 billion in the 400,000 bpd project between 2010 and 2015. Of this, OVL will invest USD 1.333 billion, while IOC and OIL will invest USD 454 million each. Early output of at least 50,000 bpd is slated to start in 2012-13, before rising to its peak in 2016.

The project cost includes USD 12.8 billion for constructing a heavy crude upgrader that can turn Orinoco's tar like oil into valuable synthetic crude. The 200,000 bpd upgrader may be built at Soledad, in Anzoategui state, to make synthetic crude of 32 degree API or higher by 2015-16.

(Sourced from ET)