OilVoice - Venezuela Awards Two Carabobo Licenses

Venezuela Awards Two Carabobo Licenses

Monday, February 15, 2010

The Venezuelan government has awarded two out of three of the licences on offer in the Carabobo heavy oil licensing round. The success of the bids will no doubt come as great news for the South American nation, who has been struggling to attract large-scale investment in its upstream segment owing to fears over the stability of Venezuela political scene.

The wining bids came from two consortia: a Repsol YPF-led consortium that has been granted rights to the Carabobo-1 project, while a second consortium headed by Chevron has been awarded the Carabobo-3 project.

The two consortia are now set to pay $1.05 billion and $500 million signature bonuses, respectively, for Carabobo projects 1 and 3. While all three tendered Carabobo blocks attracted offers before the January 28 deadline, one of the blocks still remains to be awarded.

Under the pre-agreed terms of the bidding, the victors are required to raise oil production at each block to a minimum of 400,000 barrels per day (bpd). In addition, they are contracted to finance the entire $10-$20 billion cost of each project themselves. The winning bidders will have until March 2010 to finalise the required 40-60 joint venture with state-backed firm Petroleos de Venezuela (PdVSA).

The Chevron-led consortium, comprising local oil field services firm Suelopetrol and Japanese companies Mitsubishi, JOGMEC and Inpex, will receive a 40% interest in the Carabobo-3 project, with PdVSA to hold the lion's share, with a 60% stake. The project is located some 40 kilometers northeast of Puerto Ordaz in Faja. it is made up of three blocks, covering a total area of around 557 square kilometers.

Repsol and its partners Oil & Natural Gas Corporation (ONGC) of India and Malaysia's Petronas have each been awarded an 11% stake in the Carabobo-1 project, while Indian Oil Corporation (IOC) and Oil India Ltd (OIL) stand to hold 7%. IN the same vein as the Carabobo-3 project, PdVSA will hold the majority 60% stake.

Venezuela's Oil Minister, Rafael Ramirez, has said that the two consortia have agreed to invest a combined total of $30 billion on the projects and that a production rate of 400,000 bpd will be reached by 2016.

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