India and Venezuela sign oil deal

Venezuela is Latin America's leading oil producer

India has signed a five-year, $400m joint venture with Venezuela to drill for oil and gas in Venezuela's south-eastern Orinoco region, officials say.

The state-owned Petroleos de Venezuela (PDVSA) will hold a 60% stake, and India's Oil and Natural Gas Corporation (ONGC) will control the remaining 40%.

The ONGC will invest $450m in the project.

Venezuela is Latin America's leading oil producer, with an estimated 100 billion barrels of crude oil reserves.

The venture is likely to double Orinoco's oil production to 60,000 barrels a day.

'First step'

Venezuelan officials say that the deal is expected that production will start within three years, and that the project will yield 232 million barrels of crude over the next 25 years.

"It's the first association agreement between the two countries," said Venezuelan Oil and Energy Minister Rafael Ramirez, adding that it was "a first step" towards further energy cooperation.

Mr Ramirez also said that Venezuela planned to ship 150,000 barrels of heavy crude a day to India.

Correspondents say that officials are pleased that the deal will provide energy-starved India with much needed fuel.

Murli Deora, India's Minister of Petroleum and Natural Gas, said that India is ready to be Venezuela's partner and reiterated ONGC's commitment to cooperation.

"We would be very happy to work jointly with PDVSA in financing oil recovery and technology," he told a press conference in Caracas.

The Venezuelan government, led by President Hugo Chavez, nationalised the Orinoco oil fields last year.

President Chavez is keen to reduce dependency on the United States, which is the biggest buyer of Venezuelan oil.