Bloomberg News

Russia-Venezuela Oil Venture Said Set to Miss 2012 Output Target

December 16, 2011

Dec. 15 (Bloomberg) -- Russia’s five largest oil companies will fail to meet next year’s crude production target for the Junin 6 project with Petroleos de Venezuela SA, said two company officials with knowledge of the matter.

The OAO Gazprom Neft-led group may produce no more than 10,000 barrels a day next year, about 20 percent of the planned level, said the people, who work at different companies and who declined to be identified because the matter is sensitive. State-run OAO Rosneft, OAO Lukoil, TNK-BP and OAO Surgutneftegas are partners.

Prime Minister Vladimir Putin’s deputy for energy, Igor Sechin, pledged the Russian group, which owns 40 percent of the Junin 6 venture, would begin output in May and the field would produce 50,000 barrels a day by the end of next year, while meeting with Venezuelan Oil Minister Rafael Ramirez in October.

Venezuela has turned to Russia for funds to accelerate development of heavy tar-like crude fields of the Orinoco and bolster waning output in South America’s largest oil-producing nation. PDVSA, as the state company is known, owns the remaining 60 percent of the Junin 6 venture.

Gazprom Neft, the oil arm of Russia’s gas export monopoly, said last year that the Junin 6 partners may spend $24 billion to develop the project and that production may reach 450,000 barrels a day in 2017.

Consorcio Nacional Ruso, the Russian group, still aims to reach the 50,000 barrel-a-day target, Gazprom Neft Chief Executive Officer Alexander Dyukov said in October. Ekaterina Stenyakina, a spokeswoman for the oil company, declined to comment today.

Oil output in Venezuela, a member of the Organization of Petroleum Exporting Countries, slumped 24 percent to 2.47 million barrels a day in 2010 compared with 2000, according to BP Plc data. At the same time, the Orinoco has helped swell the country’s oil reserves to 296.5 billion barrels, surpassing Saudi Arabia as the world’s largest, according to OPEC.

A spokesman for PDVSA, who asked not to be named because of company policy, declined to comment, saying he had no information on the matter.

--With assistance from Nathan Crooks in Caracas. Editors: Torrey Clark, Alex Devine

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.


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