U.S.-based Chevron and Spain's Repsol led groups that will tap into the OPEC member's 100-plus billion barrels of reserves, as oil giants struggle to replenish waning crude reserves that are increasingly under control of producer nations.
The results show victories for both sides. Oil companies agreed to tough conditions laid down by Caracas while Venezuela softened some fiscal terms, in another sign of dwindling resource nationalism around the world sparked by falling oil prices.
"This international investment is absolutely necessary for us, we could not develop the Orinoco Belt alone," Chavez told oil company officials during a ceremony in the Miraflores presidential palace.
"This is mutually beneficial. You are here because you need to be here. These are relationships of equals, of friendship."
Chavez, known for his jocular manner and combative anti-U.S. politics, spent several minutes lambasting U.S. President Barack Obama, even requesting that Chevron's regional chief help Venezuela improve ties with Washington.
"Maybe Obama will come to the Orinoco Belt, bring him," Chavez said.
Analysts say the world's reserves of easy-to-produce light oil are quickly running out, meaning the future of the industry is in difficult production areas such as the Orinoco Belt, Brazil's deep water fields or Canada's tar sands.
"It is pragmatism on the part of the Venezuelans and international oil companies," said Jeremy Martin, director of the energy program at the Institute of the Americas in California.
"The Venezuelans know they can't do this without major capital and knowhow, and (companies) know there's nowhere else in the world where they would have access to world class reserves like these."
Venezuela's oil production has fallen below 2.5 million barrels per day (bpd) from more than 3 million bpd in 2001, according to the U.S. Department of Energy, due principally to limited oilfield investment and lack of qualified personnel.
PDVSA's own official statistics show output above 3 million bpd, though even those numbers have been flat for five years. The e company has twice in the last five years pared down aggressive production increases.
Repsol will take 11 percent in its project, the same stake as consortium partners Petronas PETR.UL of Malaysia and ONCC of India. State oil firm PDVSA will take 60 percent, with two other Indian companies taking the remainder, a Repsol official said.
Chevron will lead a second project along with consortium partners that include Japan's Mitsubishi and Inpex (1605.T), plus Venezuela's Suelopetrol SPTb.CR. Japanese government affiliated Japan Oil, Gas and Metals National Corp was not included in the winners, despite having been part of the negotiations.
The government did not receive offers for a third project and did not receive bids from several companies Chavez has openly courted, including China's CNPC and Russian firms such as Lukoil and Gazprom.
This may be in part because Venezuela is running a parallel process of direct adjudication for blocks in the Junin area of the Orinoco belt.
BIG REWARDS, BIG RISKS
Venezuela holds the world's fifth-largest oil reserves at an estimated 100 billion barrels, according to the BP Statistical Review. The Venezuelan government says it holds at least 210 billion barrels that could yet be produced.
But companies face a host of risks including a major financing burden, a massive infrastructure buildout, and the liability that Chavez could launch another wave of state takeovers.
In 2007 Chavez took over operations of four Orinoco projects, leading U.S. giants Exxon Mobil (XOM.N) and ConocoPhillips (COP.N) to leave the country and sue Venezuela.
[Reuters]
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