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17 Aug, 2009 07:18

Russia and Venezuela edge closer to an oil deal

A consortium of Russian oil majors, together with Venezuela's national oil company, are looking to jointly invest about $30 billion dollars in developing the Orinoco oil fields.

At the meeting in St. Petersburg the two countries agreed to set up a joint venture in the next few months. This immediate focus is the Junin 6 block in the Orinoco oil belt, which, Venezuela says, has the world's largest reserves, with Russian Deputy Prime Minister, Igor Sechin, confirming the investment scale of the project.

“Investment in the Junin-6 project could reach $30 billion, but this sum may change.”

Surveys suggest the field can produce up to 53 billion barrels of oil. Denis Borisov, an analyst at Solid, says Venezuela is looking for cash and expertise, while Russian firms are seeking to diversify.

“Apart from Lukoil, Russian oil companies have no activities abroad. This will be a great chance for them to diversify their production. Moreover, the main consumer of Latin oil – the North American market – is very close and logistics are well established.”

The Russian-Venezuelan project is separate from ongoing bidding for four other blocks in the Orinoco region which the country has opened to foreign investors for the first time in years.

Venezuela claims it has the world’s largest oil reserves. If proved, the country will become one of the main investment targets for global oil and gas giants. This meeting in St. Petersburg, ahead of the visit of Venezuela’s President, brings Russian companies a step closer to one of the most lucrative Latin American markets.