Russia and Venezuela sign energy and assets exchange agreements

The Russian and Venezuelan ministries of energy have signed a memorandum of mutual understanding, concerning the purchase of shares by Russian-British company THK-BP from BP in Venezuela. The document was signed in Moscow by the presidents of Russia and Venezuela, Dmitry Medvedev and Hugo Chavez, RIA Novosti reports.

Russia and Venezuela signed an agreement during the visit of Russian Premier Vladimir Putin to Karakas on construction of the first nuclear power plant in Venezuela in April 2010.

Russia’s largest private oil company, Rosneft, will purchase a 50% share from the company Venezuela Petroleos de Venezuela S. A. (PDVSA) of the German company Ruhr Oel GmbH, owning the German oil refinery industry, for $1.6 billion.

Ruhr Oel GmbH is a joint oil refinement and sales enterprise of PDVSA and BP, each holding a 50% share. It has shares in 4 German oil refineries: Gelsenkirchen -100%, MiRO – 24%, Bayernoil – 25% and PCK Schwedt – 37.5%. Ruhr Oel processes 23.2 million tons annually (20% of German refinement in Germany). The purchase of Ruhr Oel should increase Rosneft's refining by 11.6 million tons annually.

President of Rosneft Eduard Khudaynatov said that 18% of the company’s power will be in the very center of industrial Europe. Rosneft will use its resource base to improve its position in Ruhr Oel.

The Kommersant newspaper reported earlier that BP has beneficial rights for purchase of the share in PDVSA. The company passed over its right to purchase in exchange for the right of joint work on the Arctic shelf with Rosneft. Negotiations on this started this summer. Preliminary agreements concerning the Arctic were reached in 2008 but there were no participants in the Kara Sea. After the government decided to provide Rosneft with the South Russian area of the Barents Sea, three Vostochnoprinovozemel areas and the South Black Sea area negotiations between BP and Rosneft were activated.

Rosneft and PDVSA have an agreement for optimization of gas compression in Lake Narakaybu and a supplies and construction project for deep extraction, entitled ‘SOTO’.

Rosneft, among four other companies, is part of a consortium established by a sister company of PDSVA to develop the Hunin-6 block in Venezuela. The consortium will pay $1 billion. A total of $20 billion will be invested over 20 years. The extraction level should be up to 22.5 million tons of oil annually.

Rosneft, among four other companies, is part of a consortium established by a sister company of PDSVA to develop Hunin-6 block in Venezuela. The consortium will pay $1 billion. A total of $20 billion will be invested in 20 years. The extraction level should be up to 22.5 million tons of oil annually.