Russia’s Rosneft OAO agreed to pay $500mn to Petroleos de Venezuela SA to increase its stake in their Petromonagas crude-processing joint venture.
The deal will increase Rosneft’s ownership to 40% in the project, which converts heavy oil into synthetic crude, the company said on Saturday in an e-mailed statement. Rosneft previously held 16.7%, while PDVSA, as the Venezuelan state-owned company is known, had the remaining 83.3% in the joint venture.
“The $500mn in new investment for production in the Venezuelan oil industry comes amid a crisis,” President Nicolas Maduro said Friday during a televised ceremony where officials from Rosneft and PDVSA signed the deal in Monagas state.
The cash infusion will help the holder of the world’s largest oil reserves to weather its deepest recession in a decade. With the plunge in oil prices eroding government revenue, Maduro raised gasoline prices this week for the first time in almost two decades and devalued the nation’s currency to get more bolivars for its petrodollars.
The Petromonagas project in Venezuela’s Orinoco belt produces and upgrades more than 130,000 barrels a day of crude, according to Rosneft. The Petromonagas upgrader prepares the oil to be processed in traditional refineries. Rosneft and PDVSA also signed an agreement for the joint development of production, treatment and sale of natural gas from offshore fields including Patao, Mejillones and potentially Rio Caribe, according to the Rosneft statement.
Rosneft and PDVSA will each hold a 50% interest in the venture, according to the statement.
The three fields are part of the Mariscal Sucre natural gas project off the eastern coast of Venezuela.
Production from the fields may reach 25mn cubic metres (883mn cubic feet) per day, which potentially could be shipped by pipeline or as liquefied natural gas, also known as LNG.
Another offshore field, Dragon, is also part of Mariscal Sucre but apparently not covered by the agreement.
Venezuela has been asking its partners to increase investment in joint ventures for several years to raise cash. In 2013, then-Oil Minister Rafael Ramirez sought to give companies operating in the Orinoco Belt and other oil regions more autonomy to make decisions related to investments and operations. He invited them to bring in their own rigs, goods and services, and financing for the joint projects.
Rosneft has interest in five projects in Venezuela: Petromonagas, Petrovictoria, Petromiranda, Boqueron and Petroperija. The projects contain estimated oil reserves that exceed 20.5bn tons (about 150bn barrels), according to the Rosneft statement.