RIL looking to buy Petronas stake in Venezuelan oil project

Reliance Industries Ltd is looking at buying Petronas' 11-per cent stake in Venezuela's $20 billion Carabobo-1 project, a company official said on Tuesday.

This is one of Venezuela's biggest petroleum projects, and the purchase will strengthen ties between the Latin American nation and RIL, the company's senior vice-president Swagat Bham said at the Petrotech 2014 conference in New Delhi.

The Mukesh Ambani-controlled RIL operates the world's biggest refining complex in Gujarat and derives nearly 80 per cent of its revenue from refining. It is hunting for cheaper, heavier crude oil to feed its refineries.

Venezuela has been Reliance's top crude oil supplier, and in 2012 the company signed a 15-year deal to buy up to 400,000 barrels per day (bpd) of heavy oil from its state-run oil company, PDVSA.

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," Bham said.

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 due to 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 has about 50 billion barrels of proven reserves, and can produce a minimum of 400,000 bpd of oil.

Petroliam Nasional Bhd, Malaysia's state-run oil company, has decided to withdraw from the Carabobo-I project in August last year following 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 the Petronas stake.

Bham said RIL was looking at Petronas stake as well as other heavy oil upgrade projects in Venezuela for a possible participation.

Latin America, he said, was of interest to RIL and the company was also eagerly looking at opening up of exploration licenses in Mexico.

OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has 11 per cent stake in the project 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.

All the partners in the project, including PdVSA, have right of first refusal or pre-emption rights to the Petronas stake.