Wednesday, May 31, 2006

Venezuela May Supply Orinoco Gasoline To Iran

Angel Gonzalez, Dow Jones Newswires:
Iran and Venezuela are discussing the creation of a heavy oil processing plant in the Orinico belt that could supply the Islamic nation with gasoline and other finished products, Petroleos de Venezuela S.A. (PVZ.YY) Director Eulogio Del Pino said Tuesday. READ MORE

"We could export gasoline from the belt to Iran," Del Pino told reporters after a presentation in Caracas. "We can upgrade semi-finished and finished products there," he said, referring to yet-to-be-built processing plant.

Orinoco crude, so heavy in asphalt it is as much a solid as a liquid, must be upgraded at expensive facilities before entering the international network of conventional oil refineries.

Iran, whose oil ministers is holding bilateral talks with Venezuelan officials ahead of a meeting of OPEC ministers here this week, imports gasoline despite being a major oil exporter, Del Pino said.

Iran is the second largest exporter within the Organization of Petroleum Exporting Countries.

Both countries are also considering Iranian participation in Venezuela's Cardon 2 offshore gas block.

"There we would like to profit from Iran's experience in offshore gas projects," Del Pino said.

The gas project could help Venezuela to export gas to Columbia in three to four years, he added.

Iran and Venezuela are traditional allies within OPEC. Both countries have been tightening energy ties within the past year, via various agreements on the table. Iranian oil company Petropars is currently evaluating reserves in the Orinoco belt, an area thought to contain the largest oil reserves outside the Middle East.

With output from cheap-to-develop conventional oil fields in decline worldwide, oil companies will increasingly turn to Venezuela's extra-heavy oil, Canada's tar sands and natural gas to supply the world's growing energy needs.