CARACAS, Mar 18 – President Hugo Chavez Tuesday hailed a six-billion-dollar drilling deal with Russia in Venezuela\’s oil-rich Orinoco basin, and a refinery and oil-export deal with China, as Venezuela\’s economy struggles with cheap oil prices.
"Two days ago, we signed in Vienna an agreement we\’d been working on for months … It\’s quite important that Venezuela and Russia have formed an energy corporation and established a dialogue," Chavez told a cabinet meeting that was briefly televised.
The joint-venture agreement was signed by Energy Minister Rafael Ramirez with Russia, on the sidelines of Sunday\’s meeting of the Organization of Petroleum Exporting Countries (OPEC) in the Austrian capital.
Ramirez said here Tuesday the deal covered a "direct investment of at least 6.0 billion dollars" in the southeastern Orinoco basin that Venezuela estimates holds 53 billion barrels of crude oil.
Venezuela has agreed to a series of joint ventures with foreign oil companies in the Amazon jungle region for prospection and extraction deals in which Venezuela\’s state-run PDVSA holds a 60 percent stake.
Chavez also said Tuesday that Ramirez had just left for Beijing to sign "three strategic agreements" on building a refinery in China and "for Venezuela to supply China over the next few years up to one million barrels of oil per day."
China currently imports more than 300,000 bpd from Venezuela, he added.
The plan is for China to be supplied with extra-heavy crude from the Orinoco basin to be refined in the new facilities going up there. A September agreement between the two countries called for oil exports to China to reach 500,000 bpd in 2009.
With the price of crude on the world market 20 dollars below what Chavez planned for this year, Chavez said his government is ready to withstand even lower prices.
Venezuela is grappling with a precipitous decline in oil values, from an average of nearly 87 dollars a barrel in 2008 — with a peak of 130 dollars — to just 36 dollars a barrel today.
Some 90 percent of the country\’s export income comes from oil, and the country planned for 60 dollars a barrel in its 2009 budget.
On Sunday, Chavez said he was considering raising the domestic price of gasoline — four cents a liter (16 cents a gallon) — to raise revenues.
But on Tuesday, he boasted: "We\’re battling to stabilize oil prices within a fair range … We were ready for 25 (dollars per barrel) or less. I told them, \’Lets get ready for oil at zero (dollars).\’"
Venezuela tried but failed to have the 12-member OPEC lower its output at their Sunday meeting.
OPEC instead decided against further cuts and froze its output at current levels, urging its members to comply with last year\’s quotas.