Reliance Industries to take up oil block in Venezuela

Reliance Industries has stepped into Venezuela's exploration sector, strengthening ties between the Latin American nations and its top Indian customer.

Billionaire Mukesh Ambani-controlled Reliance Industries and Petroleos de Venezuela (PDVSA) have agreed to study the Ayacucho Block 8 in the oil-rich Orinoco belt, the Indian company said in a statement on Thursday.

Reliance, which operates the world's biggest refining complex on India's west coast, last year signed a 15-year deal to buy up to 400,000 barrels per day (bpd) of heavy oil from PDVSA.

Venezuela has been Reliance's top crude oil supplier since May 2012.

A senior PDVSA executive said in New Delhi last year that the company was in talks for four blocks - Junin 1, Ayacucho 3, Ayacucho 8 and Boyaca 4.

It is not clear whether Reliance is out of race for the remaining three blocks or still in negotiations with PDVSA.

Participation in Venezuelan oil exploration could help Reliance lock in supplies for its two Indian refineries that can handle heavy crude, which often costs less than lighter crude options and boosts refining margins.

Reliance's two refineries at Jamnagar in western Gujarat state can process 1.2 million bpd oil, about 28 percent of India's overall refining capacity.

The private refiner wants to lift the share of its own oil used in overall processing by the two plants from almost zero at present to 25 percent to 30 percent, its executive director P.M.S. Prasad told Reuters in December 2011.

Separately, state-run Oil and Natural Gas Corp also signed a preliminary agreement with PDVSA to join exploration efforts in the oil-rich Faja area of Venezuela, the Indian firm said.

ONGC currently has stakes in two producing projects in Venezuela - Petro-Carabobo and Petro-Indovenezolan.

Copyright: Thomson Reuters 2013