Eni starts major heavy oil project in Venezuela
Rafael Ramírez, Venezuela’s minister of energy and president of PDVSA, and Paolo Scaroni, CEO of Eni, today signed in Caracas the contracts for the creation of two mixed enterprises: PetroJunín, dedicated to the development of the Junín 5 Block, located in the Orinoco Oil Belt some 550 kilometers south east of Caracas, and PetroBicentenario, dedicated to the construction and operation of a refinery in the area of the existing industrial coastal complex of Jose. The participation in both mixed enterprises will be PDVSA 60% and Eni 40% according to the terms of Venezuela’s new hydrocarbon law.
The Junín 5 Block has 35 billion barrels of certified oil in place with recoverable reserves estimated in excess of 2.5 billion barrels (Eni’s share is over 1 billion barrels). Daily production for Eni will be close to 100,000 bpd at full field development.
The companies plan to achieve an early production phase of 75,000 bpd with first oil expected by 2013 and a long term production plateau of 240,000 bpd to be reached in 2018. Approximately 1,500 horizontal shallow wells will be needed for the full field development.
The new refinery will have a capacity of 240,000 bpd plus the ability to process additional volumes of approximately 110,000 bpd of intermediate streams from other PDVSA facilities, which will provide additional value to the project. The refinery will be built in the Jose Industrial Complex, which provides access to export markets and ensures synergies with existing industrial services. The construction of this facility creates value in-country in line with PDVSA’s and Venezuela’s development strategies. Final products will target European and Caribbean markets with an estimated premium above Brent.
Eni will pay a bonus of $646 million, with $300 million paid at the publication of the contracts of incorporation for the mixed enterprises and the balance in tranches according to the achievement of milestones of the project. Awarding of major contracts is expected in 2011 for early production and in 2013 for full field development.
In Venezuela, Eni is present in Petrosucre, which operates the offshore Corocoro Field (PDVSA 74%, Eni 26%) with a daily equity production of approximately 10,000 barrels of oil, and is co-operator with a 50% stake in the offshore Cardon IV license where the giant Perla gas field was discovered in October 2009. Perla has an estimated gas in place in excess of 14 trillion cubic feet of gas (2.5 billion barrels of oil equivalent).
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