CNPC-PDVSA Joint Venture to Develop Crude Belt and Refinery

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Researched by Industrial Info Resources (Sugar Land, Texas)--China National Petroleum Corporation (CNPC) (Beijing) signed an agreement on May 9, 2008, with Venezuela's PDVSA (Caracas) to jointly develop the Junin 4 block of Venezuela's Orinoco heavy crude belt. The agreement involves exploiting the belt and building a refinery at a cost of about $2 billion.

PDVSA will take a 60% stake in the project, and CNPC will take the remainder. The new joint venture company's aim is to produce 20 million tons of products every year. Regarding the refinery, China will be responsible for 60%, and PDVSA will fund the remainder. The refinery will be located in China and meet the needs of the crude oil belt.

Investors expect the refinery to begin production in 2013, producing 400,000 barrels per day, including diesel at Euro IV standard while also meeting China's domestic need.

The companies are now focusing on a development plan, the surface technique process and a feasibility report for the refinery, a CNPC news release stated. Chinese Vice-Premier Hui Liangyu and Venezuelan President Hugo Chavez attended the signing ceremony in Caracas.

The refinery, Venezuela's first such investment in China, will help Chavez achieve his goal of shipping 1 million BBL/d, or 13% of China's demand, of oil to China by about 2011, or 13% of current Chinese oil demand, according to AFX news.

A week before the agreement, CNPC signed another oil-development deal with Syria. During the week, CNPC expanded cooperation with Nippon Oil Corporation (Tokyo, Japan) by establishing a refinery controlled by the Japanese company.

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