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Gazprom and Rosneft extract first oil from PetroMiranda Junin-6

PDVSA and Russians to pump $25 billion in Orinoco

In September 2012, the national oil company Petroleos De Venezuela SA (PDVSA) and a Russian National Petroleum Consortium LLP (NPC) made of Gazprom, Rosneft, Lukoil, TNK-BP and Surgutneftegas, inaugurated PetroMiranda first oil in the Venezuela Orinoco.

PetroMiranda is a joint venture created between PDVSA and Russian companies to rejuvenate Junin-6 block nearby by Zuata.

Historically, the Junin-6 heavy crude oil fields left by ExxonMobil and ConocoPhillips when the President Hugo Chavez nationalized the oil and gas production shortly after his first election.

Located in the east of Venezuela on the northern rim of the Orinoco river, the Orinoco basin covers 55,000 square kilometers and contains enough proven reserves to propel Venezuela, with 296.5 billion barrels ahead of Saudi Arabia at 265.4 billion while Canada stands third with 179.2 billion barrels at the end of 2011 according to BP’s Annual Statistical Review of World Energy.

According to these statistics, the global reserves of oil were slightly increasing by 1.9% to 1.65 trillion barrels.

In Venezuela most of these reserves are classified as heavy or extra heavy crude oil and require, as in Canada, a special expertise such as the international oil companies had developed and implemented them in Venezuela until the political changes.

For these technological reasons the production in the Orinoco belt has been declining or stopped until an agreement could be signed in 2010 between PDVSA and Russian partners.

President Hugo Chavez is planning to double Venezuela production by 2019 to reach 6 million barrel per day to sustain its economical program assuming the crude oil price stable around $100 per barrel.

In PetroMiranda, PDVSA and its partners share working interests as following:

 – PDVSA 60% in respect with the actual regulation

 – National Petroleum Consortium (NPC) 40%, is the operator

Within the NPC consortium, the five Russian partners, Gazprom, Lukoil, Rosneft, Surgutneftegas and TNK-BP are holding the same 20% shares of the  consortium, and 8% of the PetroMiranda joint venture.

Gazprom is leading the team for the first phase of development.

PetroMiranda to build an upgrader for Junin-6

The Junin-6 block covers 447 square kilometers and holds 50.6 billion barrels of crude oil in place out of which only 10.96 billion barrels are considered as recoverable in respect with today’s techniques.

PetroMiranda performed already 14 wells in the Junin-6 block and actually produces 10,000 b/d crude oil but is planning to reach 50,000 b/d along this first phase of development.

The production is provided by a combination of progressive cavity pumps (PCP) and some ESP pumps, but a single horizontal well was completed in August and entered in production.

For the time being, the oil is transported by truck to the nearest pipeline to be processed at the Petrosidenia central processing facility.

Later this pipeline will be expanded to the production area.

For the second phase of development, PetroMiranda has greater ambition in targeting 450,000 b/d of production from the Junin-6 field.

Such a volume will require the construction of an upgrader as used for Total PDVSA Sincor project in the same area, or in Canada with the oil sands.

All together the exploration and production phase should require $25 billion capital expenditure for which the final investment date (FID) is due in 2013 in respect with the results of the on going appraisal campaign.

For this second phase, the Russian team may see some changes, since Surgutneftegas decided to sell its shares in the  National Petroleum Consortium, while Rosneft is willing to buy them.

With 40% share of the consortium, Rosneft will be in the situation to take the lead of the National Petroleum Consortium made with its remaining partners, Gazprom, Lukoil and TNK-BP and to set a balanced cooperation with PDVSA to develop Junin-6 through the PetroMiranda joint venture.

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1 Comment to “Gazprom and Rosneft extract first oil from PetroMiranda Junin-6”

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