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StatoilHydro to step up Venezuela operations

By Benedict Mander in Caracas

Published: January 23 2008 23:07 | Last updated: January 23 2008 23:07

StatoilHydro, Norway's national oil company, signed a deal with Venezuela on Wednesday to step up operations in the oil-rich Orinoco Belt.

Two US oil majors walked away last year from multibillion-dollar projects in the region over disagreements with the government.

StatoilHydro is to quantify the reserves of the Junin 10 block in the Orinoco Belt, possibly the largest deposit of extra-heavy crude oil in the world, with the possibility of developing them.

Thore Kristiansen, who runs StatoilHydro operations in Venezuela, said: "We see enormous reserves potential in Venezuela".

Hugo Chávez, Venezuela's president, says he wants the reserves certification process under way in the Orinoco Belt to be complete by 2010. He hopes this will boost reserves from 100bn barrels to more than 300bn, more than any other country.

StatoilHydro has a 9.7 per cent stake in a nearby block, Petrocedeño (formerly Sincor), which Mr Kristiansen said was producing roughly 200,000 barrels per day.

He said: "If Junin 10 proves to have reserves of the magnitude of Petrocedeño, there is huge potential".

ExxonMobil and ConocoPhilips walked away from projects in the Orinoco Belt last year. They refused to agree to new terms after state-owned PDVSA, announced it would increase its stake in their projects, choosing instead to file for international arbitration.

StatoilHydro, Chevron, Total and BP accepted the terms.

Industry analysts say Venezuela is in desperate need of foreign investment and expertise. PDVSA has been struggling since a damaging strike five years ago resulted in the loss of many of its most experienced and qualified employees. Meanwhile, its financial resources are stretched as Mr Chávez is diverting a large portion of oil income towards social programmes.

Following the government's decision to take a controlling stake in all oil projects, many analysts are expecting a similar move this year in the gas sector. StatoilHydro has recently completed exploring Block 4 of the Plataforma Deltana, an offshore gas field.

Mr Kristiansen – who explained that the development stage was still some way off – said: "We have not been informed of any changes to our contract,.

"Before we make any decisions concerning development, the legal, fiscal and commercial framework needs to be clarified. This will take some time."

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