Venezuela to begin selling Orinoco tar tracts

Venezuela will begin selling off 27 new oil exploration blocks in the Orinoco tar belt as soon as state oil company Petroleos de Venezuela S.A. finishes calculating the oil reserves in each zone, company President Rafael Ramirez said July 1.

“We’ve begun the certification of all these reserves,” Ramirez told a news conference. Venezuela looks to increase oil output to 5 million barrels a day by the end of the decade, with around 1 million new barrels coming from the Orinoco area, the largest hydrocarbons deposit on the planet.

Venezuela claims the Orinoco holds 235 billion barrels of oil reserves, and plans to add those extra-heavy crude reserves to its 78 billion barrels of conventional oil reserves. With those unconventional reserves included, Venezuela would surpass Saudi Arabia as the nation with the world’s largest reserves.

Venezuela currently has four projects that upgrade Orinoco tar oil into more than 500,000 barrels a day of marketable synthetic crude. Six major oil firms are involved in producing and upgrading the crude oil through joint ventures with the state oil company, commonly known as PDVSA.

Ramirez said the 27 blocks would each cover 200 square miles.

PDVSA has plans to begin producing 20,000 barrels of oil a day at the San Cristobal field in the Orinoco region shortly, and reach 400,000 bpd by 2008. Ramirez said the San Cristobal crude will be refined at the El Palito refinery on the country’s northeast coast. The Orinoco projects have proven highly profitable amid record oil prices, and Venezuela has hiked tax rates on the existing joint ventures to improve revenue from oil production. Exxon Mobil Corp., one of the firms involved, has said it may seek arbitration over the tax hikes, but other major oil firms, such as Norway’s Statoil, say they are interested in new Orinoco deals despite the tax increases.

Venezuela is the world’s fifth largest oil exporter and a major U.S. supplier.

—The Associated Press