Venezuelan oil minister to discuss deals with Russia, China

27-Jan-2010

Venezuelan oil minister Rafael Ramirez is planning a trip to Russia and China to discuss oil development, the Venezuelan government said this week.

He'll attempt to garner interest in the development of a part of the vast Orinoco field. The U.S. Geological Survey revealed recently that Orinoco's recoverable reserves were higher than initially thought and could total over 500 billion barrels.

The problem with the field, though, is the oil within it: In contrast to light, sweet Saudi oil, Orinoco oil is heavy and presents recovery challenges. Venezuela's state-run oil company, PDVSA, is swamped in debt and will likely require the assistance of foreign oil firms to access and produce oil from the Orinoco field.

Russian and Chinese companies are strong candidates for developing the field: The former is flush with oil money - it has refused to follow OPEC production quotas and is swimming in cash - and the latter's hydrocarbon needs are increasing by the day.

In addition, both Russia and China will be friendlier to a Venezuelan appeal than Western nations like the U.S. and the UK, whose relations with Venezuelan president Hugo Chavez are less than cordial.

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