* Aims to produce 400,000 bpd from Junin block 4
* Deal is for 25 years, can be extended another 15
By Marianna Parraga
CARACAS, Oct 11 Venezuela has formally approved China's involvement in a joint venture to tap 400,000 barrels per day (bpd) of oil from Junin block 4 in the South American OPEC member's vast Orinoco extra heavy crude belt.
President Hugo Chavez's government signed a raft of deals with foreign companies this year to set up several Orinoco projects that are slated to add 2.1 million bpd of new production and bring Venezuela some $80 billion in investment.
Its state oil company PDVSA holds a 60 percent stake in each project. China National Petroleum Corp has a 40 percent interest in Junin block 4, where production is expected to start at 50,000 bpd in 2012 and reach its maximum by 2016, when a new upgrader in the area is due to begin work. Factbox: [ID:nN11204108]
"The joint venture will produce up to 400,000 bpd of extra heavy crude ... for a period of 25 years from the start of operations," said an agreement between PDVSA and CNPC published on Monday in the Venezuelan government's Official Gazette.
It said CNPC would pay a $900 million bonus fee in eight tranches, the first to be delivered once Venezuela has given the joint venture the legal right to exploit the area. It was not immediately clear when that would happen.
The deal can be extended for a further 15 years if both parties meet the agreed investment plan, the Gazette notice said, and there is a tax relief provision if those investments fail to be recouped from production in seven years.
China's rapidly growing economy is hungry for access to energy resources around the world, and diplomatic ties between Caracas and Beijing have expanded quickly in recent years. That includes increasing cooperation outside the oil sector.
Last month, Venezuela said a Chinese firm would refurbish the country's main port. China also built and launched a $400 million communications satellite for Venezuela in 2008, reducing its dependence on U.S. and European satellites.
In addition, the Chavez government has bought Chinese radar equipment to monitor its borders, and Beijing provided it with military training jets after Washington imposed an embargo in 2006 on sales of U.S. weapons parts to Venezuela.
Other companies with interests in Venezuela's Orinoco belt include Chevron (CVX.N) of the United States, Italy's Eni (ENI.MI), Spain's Repsol (REP.MC) and a Russian consortium of Rosneft (ROSN.MM), Gazprom (GAZP.MM), Lukoil (LKOH.MM), TNK-BP TNBPI.RTS and Surgutneftegaz (SNGS.MM). (Writing by Daniel Wallis; Editing by Dale Hudson)