India, Venezuela sign 'historic' deal on oil exploration

India, Venezuela sign 'historic' deal on oil exploration:

[India News]: New Delhi, March 5 : India and Venezuela gave a new impetus to their oil diplomacy, with the two countries signing a framework agreement Saturday to boost cooperation in the exploration and refining of oil.

An MOU was signed for cooperation in the hydrocarbon sector and another for oil exploration and production between ONGC Videsh Limited and PDVSA the Venezuelan Petroleum State Company.

"We have come to offer India friendship and cooperation, specially in the field of hydrocarbons," said Venezuelan President Hugo Chavez, who called the signing of the framework agreement with Prime Minister Manmohan Singh as the "birth of a marvellous mechanism of cooperation" between the two countries.

Chavez, who is on a four-day visit to India that began Friday, is seeking new markets to reduce Venezuela's dependence on the sale of oil to the US.

"We are impressed with strong resolution of the prime minister to strengthen our relationship," said Chavez, who met Manmohan Singh here Saturday. He also met the ruling United Progressive Alliance chairperson and Congress President Sonia Gandhi.

On Friday, Chavez, one of South America's most charismatic leaders, met

External Affairs Minister K. Natwar Singh and Petroleum and Natural Gas Minister Mani Shankar Aiyar.

"We will help India to increase its oil production. If all goes well, India will be self-sufficient soon in oil exploration and production," Chavez told reporters here. He also passionately expounded on the growing friendship with India and its spiritual roots in affection and mutual regard for each other.

Venezuela is the world's fifth largest oil producer and an active member of the Organisation of Petroleum Exporting Countries (OPEC).

A high-level meeting, which will meet in Caracas within three months, will give concrete shape to social, economic and bilateral cooperation between the two countries within the South-South ambit, Chavez said.

The use of heavy crude for product development also figures prominently in the framework agreement.

Four other MoUs were signed regarding establishment of a joint commission; cooperation in bio-technology; cooperation in space science and technology; and technology sharing in building and maintaining railways.

The joint working group will meet periodically to assess and review projects of energy cooperation, alternately in New Delhi and Venezuelan capital Caracas.

A high-level joint commission to be presided by foreign ministers of both sides will meet periodically to explore ways and means to broaden collaboration between the two countries.

Chavez said during his next visit he would like to go to Rajasthan where state-owned Oil India Ltd (OIL) already has collaboration with the Venezuelan State Oil Company PdVSA for extraction of heavy crude.

Chavez is visiting Kolkata, where he meets with the country's only Communist-ruled state government, and Banglaore, the country's IT hub.

-- Indo-Asian News Service

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NEW DELHI (Reuters) - Energy-hungry India clinched a deal on Saturday to operate a Venezuelan oilfield and import the output as Asia's third largest consumer and the world's No.5 oil exporter vowed to strengthen ties, officials said.

Venezuelan President Hugo Chavez said in New Delhi Petroleos de Venezuela and ONGC Videsh, the overseas subsidiary of India's state-run exploration firm, had signed an agreement to jointly explore and produce oil in Venezuela.

"We have already chosen a specific field where we will start drilling. This oil will come to India," Chavez told reporters.

The two countries signed an agreement to cooperate in the oil sector, paving the way for Oil and Natural Gas Corp. and gas transmission firm GAIL India Ltd to bid for exploration blocks in Venezuela, officials said.

"Within the overall framework, the specific agreement is ONGC's Videsh Ltd.'s negotiation on nomination basis for the San Cristobal oilfield," India's oil minister, Mani Shankar Aiyar, told reporters.

He said the field has the potential to produce 100,000 barrels per day (bpd).

"According to Venezuelan law, they will keep 51 percent, we will receive 49 percent plus operatorship," he said.

On Friday, Aiyar said India would also offer Venezuela equity in Mangarlore Refinery and Petrochemicals Ltd (MRPL), the refining subsidiary of ONGC.

Chavez said he wanted Venezuela to be a long-term supplier of crude to India and welcomed Indian investment in his country.

"All major oil and gas companies are there. Chinese companies are there. Indian companies are not there. India needs energy and energy is there to be shared with the rest of the world, you specially," he said.

India's sole private refiner, Reliance Industries has imported Venezuelan crude in recent years but state-run firms have not processed oil from the country.

Aiyar said MRPL's refinery could process Venezuelan crude and other oil firms were assessing which grades of oil from the country they could refine.

India, which imports 70 percent of its crude needs, consumed 2.46 million bpd in 2004 and is forecast to use 2.53 million bpd this year, estimates from the International Energy Agency show.

The country is likely to import 85 percent of its consumption in the next two decades as its economy grows between 7-8 percent a year, encouraging ONGC to compete with China for foreign oil projects.

In January, China signed energy accords with Venezuela that aimed to make the largest oil consumer in Asia a major player in the Venezuelan oil and gas industry.

Venezuela ships more than half its daily output to the United States in a decades-old energy relationship.

But Chavez, a fierce critic of Washington, has made clear he wants to diversify his country's overseas energy ties to reduce its economic dependence on the American market.

ONGC Videsh, has stakes in oil and gas projects in countries such as Myanmar, Sudan, Russia, Libya and Australia and recently signed a $40 billion deal to import LNG from Iran.

http://www.reuters.com/newsArticle.jhtml?storyID=7815957&type=businessNews