The Telegraph
Wednesday , January 15 , 2014
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Reliance eyes Venezuela block

Greater Noida, Jan. 14 (PTI): Reliance Industries is planning to buy Petronas’s 11 per cent stake in Venezuela’s $20 billion Carabobo-1 project, a company official said today.

RIL, which had in 2009 dropped out of the winning bid made by an ONGC-led consortium for developing the giant Carabobo-1 project, is “looking at taking over the participating interest of Petronas”, RIL senior vice-president Swagat Bham said at the Petrotech 2014 conference here.

The company was in 2009 supposed to bid with ONGC Videsh Ltd for one of the three giant oil blocks that Venezuela had offered through auction. It walked out of the consortium, possibly because of delays in bidding.

After RIL’s exit, OVL teamed up with Indian Oil Corp and Oil India Ltd and involved Repsol YPF SA, Spain’s biggest oil company, and Malaysia’s Petronas to make a successful bid for the massive Carabobo-1 project in the Orinoco heavy oil belt. The field, which had about 50 billion barrels of proven reserves, can produce a minimum of 400,000 barrels per day (bpd) of oil.

Petroliam Nasional Bhd, Malaysia’s state-run oil company, had decided to withdraw from the Carabobo-I project in August following a dispute over terms with Venezuela’s state explorer Petroleos de Venezuela SA (PdVSA).

The stake was first offered to the partners, all of whom including the Indian consortium declined. Besides RIL, Chinese firms, too, are said to be interested in Petronas’s stake.

Bham said RIL was looking at the Petronas stake as well as other oil projects in Venezuela.

Latin America, he said, was of interest to RIL and the company was also keen on exploration licences in Mexico.

OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has an 11 per cent stake, while OIL and IOC hold 3.5 per cent each.

Spain’s Repsol SA holds 11 per cent stake in the project, while the remaining 60 per cent is with PdVSA.

Royalty move

The oil ministry has proposed an exemption from royalty payment and an income-tax holiday of up to 10 years for the next round of auction of oil and gas exploration blocks.

At present, operators pay a 10 per cent royalty on output from shallow water blocks. For deepwater areas, the rate is 5 per cent for the first seven years and 10 per cent thereafter.

Royalty for onshore blocks, which is payable to the state in which the areas are located, will continue. The ministry also proposed to bring back income-tax holiday, which was withdrawn for gas producers through the Finance Bill 2011, an oil ministry official said.