By Torrey Clark
Sept. 18 (Bloomberg) — OAO Lukoil, Russia’s second-largest oil producer, plans to build a refinery in Venezuela with the South American country’s state company to process heavy oil from the Faja de Orinoco region. Lukoil and Petroleos de Venezuela SA will probably finish talks early next year on forming a venture to develop the Junin 3 block and refine the oil into products for export, the head of Lukoil’s overseas arm, Andrei Kuzyaev, said today in Moscow, according to spokesman Grigory Volchek. Kuzyaev didn’t identify the possible export markets. Venezuela is counting on companies from outside the U.S. to certify reserves and replace declining production beyond Faja. President Hugo Chavez’s government gave Petroleos de Venezuela controlling ownership of oil assets in the region, prompting Exxon Mobil Corp. and ConocoPhillips to abandon some projects. ConocoPhillips owns 20 percent of Lukoil. Lukoil is asking Venezuela for guarantees that costs won’t jump at the Junin 3 project. Exploration work at the field has found “billions of barrels of heavy oil,” the Moscow-based company’s Deputy Chief Executive Officer Leonid Fedun said on Sept. 13.
To contact the reporter on this story: Torrey Clark in Moscow at email@example.com . Last Updated: September 18, 2007
News on new Upgrader for Faja Orinoco region to be built by Russian (Lukoil) and Venezuela (PDVSA), talks to finish next year on JV. Looks like Russia is getting some inside info from Lukoil partner ConocoPhillips (20%) about the cost over-runs & delays most Venezuela Upgrader projects ran into. This should be interesting since neither company has shown much respect in past for private property ownership rights!