ISSUES....
Inside,
confidential, off the record
U.S.
Out- Russia In
Many
analysts expected Venezuelan President Hugo Chavez, who visited
Moscow on July 22, to sign new agreements in military-technical
cooperation, but this did not happen.
Instead, a number of Russian oil giants signed promising contracts
with Venezuela. They would replace their American counterparts,
previously ousted by Hugo Chavez.
Although the flamboyant Venezuelan president has visited Russia
more than once since he was elected in 1999, bilateral cooperation
was primarily limited to the sale of Russian weapons to Venezuela.
Last June, Prime Minister Vladimir Putin complained that mutual
investment was inadequate and urged a broader partnership with
Venezuela in the oil-and-gas industry as well as other spheres.
This desire became reality during Chavez's recent trip to Moscow.
Three Russian oil and gas companies, LUKoil, TNK-BP, and Gazprom
agreed to work on perspective licensed areas in the Orinoco River
oil belt in cooperation with the Venezuelan state-owned petroleum
company PDVSA. The three Russian companies signed the relevant
agreements with PDVSA on July 22 in the presence of the two presidents
- Chavez and Dmitry Medvedev. Moreover, these projects will be
carried out under their personal control.
"We have not only approved these agreements but have also
decided to supervise their implementation," Medvedev said
after the signing ceremony. The Venezuelan president added that
in the future the two countries may set up joint ventures on
both oil production and oil refining.
The signed agreements make it clear that each of the three Russian
companies has staked its own bloc in the Orinoco oil belt. Thus,
LUKoil has received Junin-3 bloc. In effect, it has extended
its three-year-long contract with PDSVA on the bloc's evaluation
and certification. The new two-year agreement provides for the
bloc's joint exploration and development. Once accomplished,
the two companies plan to establish a joint venture to develop
the deposit. This will require billions of dollars in investment.
The oil from this project could then be sent to an oil refinery
in Italy. LUKoil has just bought 49.9% of its shares.
TNK-BP and PDSVA signed an agreement on the joint study of the
Ayacucho-2 block in the wake of a framework memo signed last
October. As with the LUKoil agreement, it provides for a second
phase - the sale of the produced oil abroad.
Gazprom agreed to the Ayacucho-3 bloc. It signed a memo on this
bloc's certification with PDSVA in 2005. Now both parties have
decided to complete the evaluation of the bloc's reserves, and
prepare for a feasibility report before the end of this year.
There were
many friendly handshakes during the signing of the Russian-Venezuelan
oil agreements. "I look forward to seeing
all of you in Venezuela," Chavez said, shaking the hands
of the heads of Gazprom, LUKoil, and TNK-BP.
It is rather difficult to predict how successful the Venezuelan
projects will be for the Russian companies. Venezuela has abundant
oil and gas reserves, but all projects signed under the current
president, come with political implications. It is not clear
what would happen with the agreements after a regime change.
Nevertheless, Russian companies should develop their overseas
expansion. If nothing else, Russia will gain useful technologies.
All the blocs reserved by the Russian companies contain bitumen
crude oil, and Russia contains huge reserves of this crude at
home.
The signed agreements are also politically charged because the
Russian companies are essentially replacing American oil giants
- ExxonMobil and ConocoPhillips. Early last year, Chavez signed
a decree on partial nationalization of deposits in the Orinoco
oil belt, which compelled foreign companies to cede to PDVSA
at least 60% of shares in oil projects. The two American companies
did not accept these terms and refused to sign the new agreements
on oil exploration and production with Venezuela. However, British
BP, French Total, Norwegian Statoil, as well as U.S. Chevron
agreed with the new terms because current prices still enable
them to produce oil at a profit.
The Russian-Venezuelan agreements have one more political undertone.
Oil imports from Venezuela play a major role in the U.S. oil
balance. Out of 10 million barrels of oil imported by the United
States every day, 1.2 million (12%) come from Venezuela.
-
Oleg Mityayev, RIA Novosti political commentator .
Petroleumworld
News 07/24/08
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