India-Venezuela Agreement for 20 million Dollar Oil Project

On12- 13 May2010 Indian PSU Oil and Natural Gas Corporation Videsh Limited signed a pact with the government of Venezuela in Caracas capital of Venezuela. The pact is for the development of 20 million dollar oil project in Orinico region of Venezuela. The agreement took place between Petroleos de Venezuela SA (PdV) and ONGC for a joint venture named Petro Carabobo SA. The joint venture will work on two blocks Carabobo1 Centro and Carabobo1Norte under the Carabobo project in the Orinico region. The agreement also included Indian Oil Corporation (IOL) and Oil India Limited (OIL). India will get 3.6 million tones crude oil from Carabobo project. The deal was finalised in the presence of Venezuelan President Hugo Chavez and Petroleum, and Natural gas minister of India Murli Deora.

 Repsol-YPF SA of Spain and Malaysian company Petroleum Nasional Bhd (Petronas) along with OLV has 11 percent equity shares each in the Carabobo project. IOC and Oil India Limited will have 3.5 percent each. Corporacion Venezolana del Petroleo a unit of PdV will have 60 percent equity. The Carabobo Project will produce 400000 barrels on a daily basis.

• The above agreement between the two nations is part of Venezuelan policy to offer oil in exchange for loan. ONGC will invest 2 billion dollars in Venezuela in the next five years. One billion dollar will be given to the government of Venezuela and the rest will go to PdV.
• Petroleos de Venezuela,S.A.(PDVSA) [Petroleums of Venezuela] is owned
• By the government of Venezuela is a petroleum company established on 01 January 1976.
• Venezuela is the world’s fifth largest oil exporter.
• Venezuela has 77.5 billion barrels of oil reserves, the largest in western hemisphere.
• Venezuela has the largest hydrocarbon reserves.
• Venezuela also has 150 trillion cubic feet of natural reserves.
• On 05 March2005 India-Venezuela for the first time signed any bilateral agreement in New Delhi during the visit of Hugho Chavez to India. The agreement allowed Indian Oil Companies to take 49% stake in the oil industry of Venezuela. Hugho Chavez was the first Venezuelan President ever to visit India.
• During his visit, Hugho Chavez supported India’s bid for membership in expanded U.N. Security Council.

India needs oil to meet his growing energy demands. Oil is needed This agreement is important to maintain economic growth in India. Besides, the agreement can help India to consolidate influence in Latin American region. Indian investment in Venezuela may not affect India’s relationship with America. Venezuela has had a strained relationship with America.