During the working visit of Rosneft CEO Igor Sechin to Venezuela Rosneft and Petróleos de Venezuela, S.A. (PDVSA) in the presence of the country president Nicolas Maduro signed a number of documents aimed at further development of strategic cooperation between the companies.
The Parties signed an agreement on the feasibility study for the development and operation of Patao, Mejillones and Rio Caribe Blocks offshore Venezuela.
The document, signed to expand previous arrangements reached with regard to setting up a joint venture (JV) for operations at the Patao, Mejillones, and Rio Caribe fields, envisages project feasibility study by the Parties. The feasibility study will make it possible to identify the optimal scheme of gas exploration and production and consider possible hydrocarbon monetization options. The results of the study which are planned to be completed in the first half of 2017 will be submitted to the Venezuela People's Ministry for Energy and Petroleum for assessment of potential tax benefits and conditions for project resources commercialization.
The parties expect that gas production will be up to 9 bcm per year.
Crude and Petroleum Product Trading
Furthermore, Rosneft and PDVSA signed key terms and conditions of oil and oil products counter-delivery contracts.
The required legally binding documents for supplies of oil and oil products by Rosneft in exchange for Venezuelan oil and oil products produced by PDVSA will be signed based on the key terms and conditions. The parties expect that supplies will be started in 2016.
Implementation of the contract terms will reinforce trading cooperation of the two companies following the contracts, signed in 2014 and 2015 and Rosneft will be able to expand its presence at the global oil and oil products markets and get incremental earnings from the trading operations. For PDVSA these arrangements will secure necessary petroleum products and/or crude oil as well as additional channel for efficient sales of company hydrocarbons in international markets.
Energy and petrochemistry
Rosneft and PDVSA with Inter RAO-Export involvement discussed possible cooperation to develop Venezuelan power generating industry. Construction of power generating capacities, using petroleum coke, gas and coal as feedstock is considered along with hydro potential utilization.
This will make it possible to replace current diesel power stations and forward the released oil products for market sales.
Substantial volumes of hydrocarbons, produced in the country, provide broad perspectives of by-products use and monetization. Rosneft and PDVSA discussed the perspectives of switching Venezuelan diesel power plants to APG and gas.
Following joint documents signing, Igor Sechin said: "Development of cooperation in the gas sector presents a new important element of Rosneft and PDVSA partnership. Substantial resource potential of the offshore fields and their advantageous geographic location will make it possible for the companies to monetize their hydrocarbons efficiently by LNG supplies including to Asia Pacific premium markets which the Parties consider as the priority product marketing option to date. We are pleased with the progress in our trading cooperation. The achieved results enable efficient sales of our products on high-margin markets while ensuring stable and transparent cash flows for the operations of our Joint Ventures in Venezuela. Our joint APG and gas utilization initiatives for power generating industry bring new perspectives for the cost efficiency improvement of Rosneft and PDVSA JV.
Cooperation in Education
Rosneft and PDVSA also signed an agreement for further cooperation in the provision of education to Venezuela citizens in Rosneft partner universities.
Under the Agreement Rosneft will provide assistance to PDVSA in educating Venezuela specialists in the Gubkin Russian State University of Oil and Gas. Venezuelan specialists will start their education in September 2017 for three key oil and gas segments: exploration and production, oil refining and upgrading, transport and logistics.
Notes for editors:
Jointly with PDVSA the Company is successfully implementing five upstream projects in Venezuela, among them: three projects at the production stage:
- Petromonagas (Rosneft share - 40%);
- Petroperija (Rosneft share - 40%);
- Boqueron (Rosneft share - 26.67 %);
one project at the pilot development stage - Petromiranda (Rosneft share - 32%) and one project at the exploration stage - Petrovictoria (Rosneft share - 40%).
Original oil in place for these projects exceeds 20.5 billion tons.
Rosneft and PDVSA are actively cooperating in oil products delivery. The first long term export contract between Rosneft and PDVSA was signed at the St-Petersburg International Economic Forum in May 2014. The second oil and product delivery contract was signed in November 2014. In June 2015 the companies signed Heads of terms for Russian Urals oil supply to Venezuela.
Rosneft Information Division
Tel: + 7 (499) 517-88-97
29 July 2016