Petronas to Withdraw From Venezuela’s Carabobo Oil Project

Petroliam Nasional Bhd., Malaysia’s state-run oil company, said it will withdraw from the Carabobo project in Venezuela.

PC Venezuela Ltd., a unit of the Kuala Lumpur-based explorer and refiner that owns 11 percent in Carabobo-1, informed the Venezuelan authorities of its decision on Aug. 27, Azman Ibrahim, a Petronas spokesman said in e-mailed statement, without giving a reason for pulling out or explaining how the company will exit the venture.

Petronas is dropping out of the project after a dispute over terms with state-controlled oil explorer Petroleos de Venezuela SA, Reuters reported yesterday, citing people familiar with the development.

Petronas joined Spain’s Repsol SA, India’s Oil & Natural Gas Corp., Indian Oil Corp. and Oil India Ltd. to take a combined 40 percent interest in Venezuela’s Carabobo-1 project in the Orinoco heavy oil belt in February 2010. Venezuela, which holds the world’s biggest crude oil reserves, has struggled to raise production. Output has dropped every year since 2007, according to the BP Statistical Review.

The Carabobo-1 project, of which PDVSA owns 60 percent, planned to produce 480,000 barrels of oil a day, Venezuela’s Oil Minister Rafael Ramirez said in 2010 when the companies won the auction. The field requires $15 billion to develop and produce, according to Ramirez.

It was producing about 1,000 barrels a day in March, T.K. Ananth Kumar, finance director at Oil India, said at the time.

Ramirez yesterday declined to comment on Petronas’s exit.

Venezuela’s Orinoco belt extends over 55,314 square kilometers (21,357 square miles) and contains 257 billion barrels of proven heavy oil reserves, according to PDVSA.

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