May 28, 2015 / 12:41 AM / 2 years ago

Venezuela, Russia's Rosneft agree on $14 billion oil, gas investment

3 Min Read

Venezuela's President Nicolas Maduro speaks during the opening ceremony of a new avenue and inauguration of a public transportation route with Yutong brand buses in Los Teques, Venezuela May 16, 2015.Marco Bello - RTX1D9XA

CARACAS (Reuters) - Venezuela and Russia's top oil producer, Rosneft, have agreed on around $14 billion in investment in the South American OPEC country's oil and gas sector, President Nicolas Maduro said.

Maduro met the chief executive of state-owned Rosneft, Igor Sechin, on Wednesday, in the company of the president of state oil company PDVSA [PDVSA.UL], Eulogio del Pino, and National Assembly boss and Socialist Party No. 2 Diosdado Cabello.

"We had a great meeting and agreed on investment of over $14 billion," Maduro said on Wednesday evening in a televised broadcast, adding the funds would go toward doubling Venezuela's oil production.

PDVSA has formal ambitious targets to double national production to 6 million barrels a day by 2019, with 4 million of that projected to come from the Orinoco Belt, but few industry experts or foreign investors expect those goals to be met.

Speaking at a Socialist Party event broadcast on state television, Maduro did not provide a breakdown of the investment plan, and it remained unclear who would fund it.

PDVSA and the Venezuelan Oil Ministry did not immediately respond to requests for details.

Rosneft said in emailed comments that the $14 billion dollars was the total amount of investments of the company in Venezuela during the lifespan of current and future projects.

It already invested $1.8 billion in 2010-2014, and it sees its own oil production in the country rising to 8 million tonnes per year (160,000 barrels per day) by 2019 from 1.6 million tonnes in 2014.

The company also added that if shale oil production in the United States and Canada declined, Venezuelan oil could step in to meet demand in those markets.

Fresh investment would be a boon for cash-strapped Venezuela, which is seeking to ramp up oil output to counter an economic crisis and the recent tumble in oil prices.

Russia was also tipped into crisis by last year's sharp drop in oil prices, which was compounded by Western sanctions over the annexation of Crimea and what the West says it support for rebels in eastern Ukraine, causing sharp falls in the value of the rouble currency.

Russia denies direct military involvement in eastern Ukraine.

Rosneft and PDVSA signed a new contract for supplies of oil and oil products of Venezuelan production, the Russian company said in November. The document envisages supplies of over 1.6 million tonnes of oil and 9 million tonnes of oil products to Rosneft within five years.

PDVSA said on Twitter the two countries on Wednesday had agreed to "create companies together" to boost crude production, adding both nations want to expand crude extraction in the Orinoco Belt, where Rosneft already has joint ventures with PDVSA.

The Venezuelan company said in a statement later on Wednesday Rosneft had proposed increasing its stake in the Petromonagas joint venture from the current 16.7 percent to reach 40 percent, the maximum allowed for a foreign partner in oil joint ventures in the South American country.

Reporting by Alexandra Ulmer and Eyanir Chinea; Additional reporting by Vladimir Soldatkin in Moscow; Editing by Alison Williams

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