Exclusive: Malaysia’s Petronas exiting Venezuela crude project – sources

ARCHIVES 2013

By admin-s On Sep 10, 2013

(Reuters) – Petronas planned to feed a new $19 billion refinery and petrochemical complex in southern Malaysia with Venezuelan crudes produced at its joint venture. The consortium paid $1.05 billion to the Venezuelan government in May 2010 to become a partner in the project and it has to deliver an extra payment of $1 billion to finance PDVSA’s stake, according to the terms of the deal.

Malaysian oil company Petronas is exiting one of the biggest petroleum projects in Venezuela’s Orinoco belt after disagreements with state-run PDVSA, sources close to the venture told Reuters.

The flagship project, called Petrocarabobo, has planned investments of about $20 billion over 25 years and calls for building a 200,000 barrel per day upgrader to convert heavy crude into light crude oil.

When the venture was formed in 2010, Venezuela touted it as a sign that oil companies were willing to put up with demanding fiscal conditions in exchange for access to the world’s largest oil reserves.

State-owned Petroleos de Venezuela (PDVSA) has 60 percent of the project. Petronas belongs to a consortium that holds 40 percent. Its other partners are Spain’s Repsol, India’s ONGC (ONGC.NS) and two small Indian firms. Petronas holds an 11 percent stake.

“We exited already,” said a top executive from Petronas, who was not authorized to speak publicly about the matter. He added that the company will not run any other projects in the OPEC-member country.