Posted on 02/02/2010 5:25:35 AM PST by thackney
Russia and Venezuela will invest $20 billion over 40 years in a giant Venezuelan oilfield to produce almost half a million barrels per day of oil that can be shipped to U.S. markets, Russian officials said on Monday.
A consortium of Russian firms and Venezuela's state-run PDVSA agreed on Monday to set up a venture to tap the Junin 6 oil field in the Orinoco oil belt, which Venezuela says has the world's largest hydrocarbon reserves.
"I don't rule out it (supplies) could be to U.S. markets," Russia's top energy official, Deputy Prime Minister Igor Sechin, said after the signing ceremony overseen by Prime Minister Vladimir Putin.
Sechin said production could reach 450,000 barrels per day.
The deal heralds close political and economic cooperation between Moscow and Caracas, which has previously bought Russian weapons and recognised Georgia's pro-Kremlin breakaway regions of Abkhazia and South Ossetia.
"After today's agreement is ratified by the parliament of Venezuela, the consortium of Russian firms will transfer a bonus amounting to $600 million," Putin said.
A U.S. government report showed last month Venezuela's Orinoco oil region could contain about 513 billion barrels of crude that could technically be recovered by energy companies if cost were not an issue, making it the world's top oil region.
Venezuela is the third-largest foreign supplier of crude oil and refined petroleum products to the United States.
Venezuelan President Hugo Chavez has repeatedly threatened to cut supplies to U.S. markets, although these threats have failed to materialise.
Russia has said previously that exploration of the Junin 6 oil field could require $30 billion in investment, while PDVSA has said the field has the potential to produce 200,000 barrels per day.
Russian companies in the project include Rosneft, Gazprom, LUKOIL, TNK-BP and Surgutneftegaz, which together hold 40 percent. PDVSA has the remaining 60 percent.
over 40 years
Russia is a worthy “partner” for Hugo- let Chavez just try to seize and nationalize Russian assets.
Isn’t the crude oil in Orinoco oil belt thick a peanut butter? An very close to impossible to extract?
I believe it is very similar to Athabascan Oil Sands and some means of removing the petroleum include steam injections.
More than you wanted to know at:
THE ORINOCO HEAVY OIL BELT IN VENEZUELA
http://cohesion.rice.edu/naturalsciences/earthscience/research.cfm?doc_id=2819
Fine, the incompetent Venezuelan thugs will grind through that capital too.
I would think that any new production in the Western Hemisphere is good for us.
It’s a world market. Any new production will add downward price pressure unless consumption ramps up.
Could you give us a quick lesson on the cost of extracting and refining heavy sour crude from oil sands? Is there any rule of thumb by which this oil is discounted vis-a-vis, say, West Texas Intermediate?
I’ll look for some cost of extraction from Candian Sands. Keep in mind cost has little to do with price except to fund projects or shut down existing. Nobody buying cares that it cost you more than a West Texas pump jack.
Price is a function of quality. Heavy oil sells for less because it cost more to refine, or you get less valuable products. Sulfur content lowers price as it cost more to remove and you get a little less petroleum for increasing amounts of sulfur per barrel.
When prices were higher, the deltas between high quality to low quality oil were also higher.
Look at the following link, then change the period from recent months to recent years and look at the delta back in 2008.
Landed Costs of Imported Crude by API Gravity
http://tonto.eia.doe.gov/dnav/pet/pet_pri_land3_k_m.htm
A little dated but probably still relevant.
http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/lsnd/lsnd-eng.html
What are the operating costs and the supply costs of producing a barrel of oil from the oil sands?
The estimated operating costs range from $6 to $14 per barrel for bitumen and $18 to $22 per barrel for synthetic crude oil. The estimated supply costs ranges from $14 to $24 per barrel for bitumen and from $36 to $40 per barrel for synthetic crude oil. Supply costs include operating costs, capital costs, taxes, royalties and the rate of return on investment.
Note operating cost are after the huge capital investment. I think supply cost includes both, but does not include taxes and royalties, I think.
The joke is on them — we’ll be too stone broke to buy foreign oil if Comrade Obama has his way.
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