Latin Lessons: Russian Companies Expand in Venezuela and Nicaragua
This is an abridged version. The full text is avaiable to subscribers to The Russian Energy weekly.The number of projects with Russian participation is on the rise in Venezuela, and Nicaragua seems to be the next target. The Russians prefer to deal with regimes that are friendly to Moscow—and private companies evidently have to play by the rules established by government-controlled corporations there.
On the Orinoco River
CEO of Gazprom Neft Alexander Dyukov announced in early April that the Russian-Venezuelan PetroMiranda joint venture would produce oil in August. The JV operates a deposit of heavy viscous crude within the Junin-6 block in the Orinoco Delta. In a year, production is expected to reach 50,000 bpd and by 2018 it may be raised to 450,000 bpd. The tempo is very good for a two-year-old project. Just a year ago PetroMiranda was planning to begin production in 2013.
Actually, the JV, formed by Russia’s National Petroleum Consortium (Rosneft, Gazprom Neft, Lukoil, TNK-BP and Surgutneftegaz) with PdVSA, did not have to start from scratch. It inherited the assets of another consortium, formed by ExxonMobil and ConocoPhillips. The Americans abandoned Junin-6 after Hugo Chavez made up his mind to nationalize their property in Venezuela in 2007.
The Venezuelan company has retained 60% in Junin-6, the minimum allowed by the national legislation. It means that each of the Russian partners is entitled to 8%, although some of them are also engaged in other projects in the same country.
The US companies do not disclose the size of their investment in Junin-6 although ExxonMobil did publish an estimate of its losses in two Venezuelan projects, $10 bln. According to PdVSA, 14 wells had been drilled at the block before the arrival of the Russians and some infrastructure has also been installed.
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