Malaysia’s state-owned oil company Petronas is backing out of a multi-billion dollar venture to help develop Venezuela’s Orinoco Belt, one of the world’s largest heavy oil deposits. Carabobo-1 was the flagship Orinoco development project, and Petronas had an 11 percent stake in it. The FT paints the backdrop to the decision:
The projects have been slow to get off the ground, with production falling far short of targets. They have also failed to arrest the decline in Venezuela’s oil production, which has now fallen every year since 2007, according to the BP Statistical Review. It stood at 2.7m barrels a day last year—down 18 per cent since 2006.The Orinoco Belt projects have also been overshadowed by legal disputes. ExxonMobil and ConocoPhillips left Venezuela after the government of Hugo Chávez stripped them of their leading role in Orinoco joint ventures. They continue to seek compensation in arbitration proceedings.
It’s almost as if the Malaysians don’t have confidence that Venezuela’s increasingly politicized oil company is a reliable partner…[An oil drilling rig in the Junin 10 field in the Orinoco Oil Belt, in Anzoategui, Venezuela. Photo courtesy Getty Images.]