Years after it dropped out of a ONGC-led consortium for developing Venezuela’s giant oil fields, Reliance Industries is keen on taking a project to produce heavy oil in the South American OPEC nation.
RIL wants to partner Venezuelan state oil monopoly Petroleos de Venezuela, or PdVSA, to develop a project in the Orinoco extra heavy crude belt, industry sources said. It has expressed interest in Boyaca 4 block and a separate section in the Ayacucho area of the Orinoco belt.
Both these areas can produce 200,000 barrels per day (10 million tons a year) each. Venezuela Oil Minister Rafael Ramirez in Caracas on Tuesday indicated of RIL’s interest and his government will “review the development plan and see if they can participate in it.”
This followed RIL signing a new agreement to buy more crude oil from Venezuela. It had in 2008 signed an agreement to buy 150,000 bpd of oil, which was gradually raised to 270,000 bpd at present.
Under the new 15-year agreement, the South American country would sell between 300,000 bpd and 400,000 bpd.
RIL operates twin refineries at Jamnagar with a total refining capacity of 1.24 million barrels a day. Half of its crude diet can be heavy oil. PdVSA said earlier this month that it plans to raise overall shipments to India to 518,000 barrels a day by 2018.
Sources said RIL was in 2009 supposed to bid with the Indian consortium of ONGC Videsh Ltd, Indian Oil Corp and Oil India Ltd for one of the three giant oil blocks Venezuela was offering the auction. It, however, walked out of the consortium possibly because of delays in bidding.
After RIL’s exit, OVL-IOC-OIL teamed up with Repsol YPF SA, Spain’s biggest oil company, and Malaysia’s Petronas to made a successful bid for the massive Carabobo-1 project in Venezuela’s Orinoco heavy oil belt. The field, which had about 50 billion barrels of proven oil reserves, can produce a minimum of 400,000 bpd of oil.
Sources said RIL in 2010 expressed interest to join the project but it was turned down by the PSU consortium. Venezuela is important for RIL as it buys crude oil from the South American nation for its over 62-million-tonne-per-annum capacity refineries in Jamnagar.
The complex refineries of RIL are suitable to process relatively-cheaper Venezuelan crude where margins are high. RIL and PdVSA also plan to work together on studies of how to update and improve Venezuela’s refinery network, as well as PdVSA’s plans to tap offshore natural gas reserves, including the long-delayed Mariscal Sucre project, which is due to begin extraction before the end of this year.