PdV signs oil, gas deals with Repsol, Rosneft

OREANDA-NEWS. October 10, 2016. Venezuelan President Nicolas Maduro announced new oil and gas agreements between state-owned PdV and Spain's Repsol, Russian state-owned company Rosneft and four small local companies.

The separate agreements were signed on the same day that PdV extended a deadline for a proposed debt restructuring that is widely seen as a costly bulwark against a potential breach of the company?s weighty debt obligations.

"Finally we have reached these agreements that allow us to plan in a much more detailed form and drive oil production in the zones where we have important volumes of reserves," Maduro said at the Miraflores presidential palace where he met with Repsol and Rosneft executives.

The agreements signed today include a \\$1.2bn credit line from Repsol to expand crude output at its Petroquiriquire joint venture with PdV within five years.

The agreement was signed by PdV chief executive Eulogio Del Pino and Repsol executive director Josu Jon Imaz.

Repsol said the credit line would be invested in Petroquiriquire's core operations including new well drilling and reopening of wells. Petroquiriquire is currently producing a combined 41,600 b/d from the mature Mene Grande, Bar?a Motat?n and Quiriquire fields located in the states of Zulia, Trujillo and Monagas, respectively.

PdV controls the joint venture with a 60pc stake. Repsol holds 40pc.

Terms of the agreement were not disclosed. But the Quiriquire field in eastern Venezuela in particular could be especially relevant for PetroCarabobo, the Orinoco heavy oil project between PdV, Repsol and a group of Indian companies. Orinoco crude of 8-10°API needs to be blended with lighter crude for marketing. Venezuela?s light and medium crude production is declining, forcing the cash-strapped company to import light crude, but it has a hard time paying for it.

PdV today also signed a \\$20bn financing agreement with Rosneft to improve operations at five Orinoco heavy oil belt joint ventures producing a combined 170,000 b/d of crude, Maduro added.

The Rosneft agreement, signed by the company?s chief executive Igor Sechin, is also aimed at propelling Venezuelan offshore gas production in PdV?s undeveloped Mariscal Sucre project.

Rosneft is a minority partner in PetroMonagas, an integrated Orinoco crude production and upgrading joint venture that was nationalized by Venezuela in 2007. PdV?s previous partners in the project, formerly known as Cerro Negro, were ExxonMobil and Germany?s Veba Oel.

Rosneft is also a partner in PetroVictoria, a new Orinoco joint venture with PdV adjacent to PetroMonagas in the Carabobo section of the oil belt.

PdV is currently negotiating the terms of a contract with oil services giant Schlumberger to drill 80 horizontal wells in PetroVictoria.

Schlumberger calls the integrated drilling project "one of the most significant projects of the year."

"Although the details for the commercial terms including the collections assurance mechanism are still under negotiation, we are pleased to see new business models emerging, and we maintain our commitment to PDVSA and Venezuela's oil and gas industry," Schlumberger said last month.