Eni Enters Production Deal With Venezuela

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Italian oil giant Eni SpA and Venezuela's state-run oil company Petroleos de Venezuela SA have announced an agreement for producing and refining crude oil found in Venezuela's Orincoco basin. Petroleos de Venezuela will hold a 60% stake in the project and Eni will hold 40%. Financial terms were not disclosed.

In 2006, Venezuela's took control of an oil field managed by Eni (E) as part of President Hugo Chavez's plans to nationalize the country's oil assets. Venezuela, an OPEC member, produces about 3.1 million barrels of crude per day and is the world's fifth-largest oil exporter.

The venture with Eni will operate in a 164-square-mile area of Junin 5 in eastern Venezuela with the hopes of producing 75,000 barrels per day of crude beginning in 2014, according to press reports. Once output reaches 240,000 barrels per day, Eni and Venezuela will break ground on a jointly operated refinery at the nearby Jose Industrial Complex, press reports said.

Venezuela said it produced about 600,000 barrels of crude per day in the Orincoco region in 2009. According to preliminary estimates, the region could hold as much 280 billion barrels of recoverable crude. Eni is one of 20 foreign oil firms operating in the region.