Russian businesses will expand their presence in Venezuela

Thursday, November 21, 2019

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Russian businesses will expand their presence in Venezuela, a deputy prime minister said on Monday at the end of his official visit to the South American country. Alexander Zhukov, who visited Venezuela on October 25-27, said UC Rusal has received permission to build an alumina plant, in which it will hold a 50% stake. He said that under Venezuelan law, in projects with a share of foreign capital, over 50% must belong to the Venezuelan partner, but that President Hugo Chavez made an exception for Rusal, allowing it to hold a 50% stake. Zhukov said an agreement on Rusal's participation in the $1 billion project, with a capacity of 1 million metric tons of alumina a year, would be signed in the foreseeable future. He also said Russian energy giant Gazprom [RTS: GAZP] would soon sign an agreement with the Venezuelan state oil and gas company PdVSA on the certification and appraisal of oil reserves at the Ayacucho-3 block in the Orinoco oil belt. He said that under this project, the sides will hold consultations on setting up a joint venture as well as on Gazprom's possible participation in other oil producing projects in the area. The Russian deputy prime minister said Gazprom had also asked the Venezuelan government for permission not only to participate in geological prospecting but also in the independent production and marketing of Venezuelan gas. Gazprom would like to secure the right to market gas from the Urumaco 1 and Urumaco 2 gas fields in the Gulf of Venezuela. Zhukov said TMK [RTS: TRMK], Russia's largest steel pipe manufacturer, would sign soon an agreement with Venezuela on the delivery of 25,000 metric tons of seamless pipes for trunk pipelines, adding that the volume of deliveries may subsequently increase, since Venezuelan authorities said they need about 750,000 metric tons of pipes. He also said LUKoil [RTS: LKOH] expects to sign before the end of the current year an agreement with state controlled oil company PdVSA (Petroleos de Venezuela S.A.) on the rehabilitation of oil wells in Venezuela LUKoil is putting into operation several projects in the South American country. The Russian company is completing geological prospecting of the Junin-3 block in the Orinoco oil belt, and is holding talks on setting up a joint venture with the national petroleum company of Venezuela, PdVSA, for the rehabilitation of inactive oil wells. The joint venture is expected to be set up in 2008. The second largest oil company worldwide by proven reserves of hydrocarbons, LUKoil accounts for about 1.3% of global oil reserves and 2.1% of world crude output. The company contributes 18% to Russia's oil output and 18% to the country's oil refining.