Closing in: PDVSA in advanced talks for new three-way deal
Caracas lines up three-way Orinoco pact
China National Petroleum Corporation (CNPC), Venezuela's state-run producer PDVSA and French giant Total are in advanced talks on a complex three-way multi-billion dollar oil production and refining venture in the Orinoco play, sources close to the negotiations said today.
Senior officials from PDVSA, CNPC and Total are to meet in Caracas next month to discuss a 20-year pact to send 200,000 barrels per day of Venezuelan oil to China, possibly starting in 2013, with volumes rising after that, a Dow Jones report said.
CNPC is talking to Total about a package involving a joint bid for Orinoco oil assets, building an upgrader to process the heavy oil produced in Venezuela and shipping it to a CNPC-PDVSA refinery to be built in Guangdong, couthern China, a CNPC official told the news agency.
Total declined to comment, but a company spokeswoman told Dow Jones that the company had extensive links with China and confirmed that "we are in discussions with CNPC on a variety of projects".
The deal will help cash-strapped Venezuela develop oil reserves it cannot afford to exploit on its own, trim dependency on the US as the main buyer of its oil, and allow energy-deficient China to reinforce ties with a nation sitting on huge oil reserves.
Last week, Total boss Christophe de Margerie told China's 21st Century Business Herald newspaper of plans for a "joint venture refinery in China, to supply crude oil produced from Total and CNPC's blocks in Venezuela to this refinery".
He did not give further details.
Sources confirmed this plan involves CNPC-Total bidding for one of the Carabobo oil blocks in the Orinoco basin that Venezuela has offered to foreign investors, Dow Jones said.
It builds on an agreement CNPC and PDVSA made last year to build a 400,000 bpd refinery in Guangdong to process high-sulfur Venezuelan crude, with PDVSA taking a 49% stake.
The final go-ahead has been delayed pending an oil supply deal for the refinery.
Under the proposals, heavy Carabobo crude will first be processed at an upgrader unit in Venezuela, to be built by Total, then shipped to China to be further refined.
Bloomberg said it was not clear if Total's share of the Carabobo oil will be sent to the CNPC-PDVSA refinery, or even to China.
Last year, PDVSA gave 19 foreign oil companies access to geological data from Carabobo as part of the licensing round.
The Venezuelan government claims the area being offered contains 272 billion barrels of recoverable reserves.