MercoPress. South Atlantic News Agency

Argentina and Uruguay in Orinoco belt oil venture

Argentina and Uruguay government owned oil companies, Enarsa and Ancap, together with Venezuelan giant PdVSA agreed to explore and extract crude from the Orinoco Belt in southern Venezuela following the signature of an agreement Friday during the Mercosur summit.

The agreement was signed by Venezuelan Energy Minister Rafael Ramirez, Argentine Planning Minister Julio De Vido and Uruguay's government owned oil company, Raul Sendic in Córdoba, Argentina.

The accord provides for joint exploitation of Block Six of the Mariscal Ayachucho zone of the Orinoco Belt, a region rich in heavy and extra-heavy crude oil plus tar sands. The agreement contemplates PdVSA will retain 51% of all crude extracted, while the other 49% will be split between Argentina and Uruguay.

In Montevideo, Ancap President Daniel Martinez said that the project had been in the works for months and that the original partner was to be Chile instead of Argentina. Martinez added that preliminary estimates in Block Six show that Uruguay could be entitled to some 50,000 barrels per day.

Argentina's De Vido said that Enarsa will gain access to the crude via subsidiary contracts with private companies, "which are the ones that will invest in developing the oilfields with the approval of PdVSA, which is the owner". However it is estimated that it will be four years before oil starts flowing from Block Six.

Venezuela is the world's fifth-leading oil exporter and the surge in crude prices has made it profitable to develop the country's massive reserves of heavy crude and tar sands which is more expensive to extract and to refine.

In related news, Venezuela's PDVSA said it was downgrading plans to expand a refinery in Uruguay and announced it was considering boosting capacity at a Paraguayan facility.

PDVSA signed a memorandum of understanding with Uruguay's Ancap to increase the capacity of the La Teja refinery by 20% to 60, 000 barrels a day, the company said in a statement late on Friday.

Officials had previously talked of doubling capacity, at an estimated cost of some 600 million US dollars. No cost estimate was given for the new expansion. PDVSA said the project is expected to take from five to seven years and will allow the refinery located in Montevideo, to refine heavy Venezuelan crude.

As to the project in Paraguay, PDVSA technical experts are scheduled to visit the Villa Elisa refinery. The company hopes to boost refining capacity from 7 000 barrels a day to as many as 12 000 but of heavy Venezuelan crude.