June 28, 2006
PdVSA and Petrobras make big find at Venezuela heavy oil block

(Dow Jones) - "State-run oil firms Petroleo Brasileiro SA (PBR) and Petróleos de Venezuela SA (PVZ.YY) have found a large deposit of oil sands at the Carabobo 1 block of the Orinoco river basin, marking the first solid results in a campaign to book recoverable reserves in the area, PdVSA President Rafael Ramírez said.

'We started in Carabobo 1...we thought we were going to find 80 feet of oil sands, and we found 240 feet,' Ramírez said in a speech at the Latin America Petroleum Show.

PdVSA, as the Venezuelan state firm is known, has teamed up with foreign state-owned oil firms like Petrobras, Iran's Petrobars and Russia's Lukoil to calculate the amount of heavy oil reserves in the Orinoco river basin.

PdVSA expects to book at least 235 billion barrels of recoverable reserves in the area over the next three years, which will make it home to the largest oil reserves on the planet.

A source at PdVSA said the 240-foot layer of oil sands holds 1.2 billion barrels of recoverable oil, bringing the total estimated reserves in the block to 6 billion barrels. The layer of oil sands lies roughly 2,000 feet below the surface, added the source.

PdVSA and Petrobras began drilling seismic wells at Carabobo 1 earlier this year. The two companies have only signed an agreement to book the reserves, but Petrobras has shown an interest in developing the area with PdVSA under a joint-venture project. Venezuela currently produces slight over 600,000 barrels of oil a day in the Orinoco, and the company plans to double production over the next six years.

Concerning the four existing projects in the area, Ramírez said they must adjust the contracts to Venezuela 's 2001 Hydrocarbons Law, which gives the state a majority stake, before they can expand output.

PdVSA wants these projects to increase recovery rates through technologies like steam injection. Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), Statoil (STO), BP PLC (BP), ConocoPhillips (COP) and Total (TOT) are involved in these projects.

25 chinese rigs to begin arriving in 13 months

In an effort to put more of the domestic oil service industry under PdVSA's control, the company has purchased 25 Chinese-made rigs, said Ramírez.

'Luis Vierma just got back from China,' said Ramírez, referring to the company's vice president of exploration and production. 'We bought 25 rigs over there.'

Vierma, who was present at the event, said the first rig will arrive in 13 months, at which point PdVSA will begin receiving one rig per month until the full shipment arrives.

Venezuela needs more rigs to increase production, and PdVSA and other operators have had difficulties finding rigs amid the current oil boom as drilling equipment is in short supply from Indonesia to the Gulf of Mexico.

Pdvsa has said China Petro Technology and Development Corp., a unit of China National Petroleum Corp, or CNPC will supply the new rigs, and that Venezuela will eventually begin assembling the Chinese rigs in Venezuela (...)".