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Carabobo Block in Orinoco Oil Belt likely to produce more than 800,000 bpd

The Venezuelan government estimates investments in oil upgraders at USD 6 billion

Minister of Energy and Petroleum Rafael Ramírez said that the companies taking part in the bidding have to submit a funding scheme (Photo: AFP)

Venezuela's Ministry of Energy and Petroleum started bidding a number of Orinoco Oil Belt blocks and invited 47 oil companies to tender for minority stakes in the area.

While Venezuelan authorities are reasserting state control over strategic areas, the Ministry of Energy and Petroleum moved to let a number of private companies take part in the development of the Carabobo Oil Block.

Minister of Energy Rafael Ramírez explained that the block would be divided into four areas (Carabobo 1 North, Carabobo 1 Central, Carabobo 2 North and Carabobo 4 West). Some joint ventures will be organized for the development of the blocks. Venezuelan state-run oil company Petróleos de Venezuela (Pdvsa) will own at least 60 percent of the shares in such joint ventures. Ramírez added that holdings may be organized as well.

According to experts' estimates, output in each block is likely to amount to 200,000- 240,000 bpd.

Under the guidelines established by the Ministry of Energy, Carabobo 1 North and Carabobo 1 Central blocks could be developed jointly, just like the Carabobo 2 North and Carabobo 4 West. Therefore, production in the joint blocks would range between 400,000 and 480,000 bpd, bringing total production above 800,000 bpd.

The Ministry of Energy and Petroleum expects production in the blocks to start by 2011, when an estimated production of 100,000 bpd per block should be in place, according to analyts.

The development of the blocks involves the construction of two special refineries, known as upgraders, by 2014. The plants will be located in the Venezuelan southern-eastern city of Soledad. Each upgrader will have a production capacity of 200,000-240,000 bpd. Venezuela will invest USD 6 billion to build each upgrader. Ramírez, who is also the President of Pdvsa said "that the amount is under review and may vary depending on the cost of materials."  

"Production cost for a barrel of extra heavy oil in the Orinoco Oil Belt is between USD 1 and USD 1.5, whereas in the upgrader the cost ranges from USD 2 to USD 2.5, depending on the complexity. In total, the maximum production cost in these projects is USD 4 per barrel," Ramírez said, adding that a recovery factor of 20 percent would be fulfilled after 15 years.

Together with the upgraders, the project provides for the construction of a solids terminal near the Orinoco River and a liquids terminal in Araya (eastern Venezuela) for shipment of hydrocarbons and with a capacity of 800,000 barrels.

Given crude production levels in other areas of the Orinoco Oil Belt and the extraction capacity in the blocks, Ramírez estimated that by 2013 total production in the area would exceed 1.5 million bpd. 

Translated by Gerardo Cárdenas

Mayela Armas

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