Published on : Mar 3, 2008

The joint venture of Eni and state-run Petroleos de Venezuela will target development of 1.3 bn barrels, Italian Foreign Minister Massimo D'Alema said. "This project is immense," he said.

Eni, based in Rome, is seeking oil and gas deposits to help boost production by an average of 4.5 per cent a year by 2011. Venezuela is courting private investment after two years of nationalisation.

Venezuela in 2006 and 2007 reduced foreign ownership of oil fields, taking operating control from companies in the 34,000-sq-mile Orinoco Belt, the site of one of the biggest oil deposits in the Americas. This year, Venezuela signed new exploration deals with Royal Dutch Shell, Total and StatoilHydro.

The agreement, signed at a ceremony with Venezuelan Energy and Oil Minister Rafael Ramirez, comes two weeks after Eni agreed to drop arbitration over Venezuela's expropriation of the Dacion oil field north of the Orinoco Belt. Eni accepted $700 m over seven years. The company had said the field was worth $829 m.

Venezuela plans to finish certifying 313 bn barrels of reserves next year to put itself into first place among the world's proved reserves. The current leader, Saudi Arabia, had 264.3 bn barrels as of the end of 2006, according to the Organisation of the Petroleum Exporting Countries annual report.

The Venezuelan project would make Latin America the region with the second-greatest reserves after the Middle East.
-BLOOMBERG