U.S. energy giant Chevron Corp. (CVX: Quote) agreed Wednesday to invest $2 billion in the Boscan oil field in Venezuela's Western state of Zulia to boost petroleum production at the oil field. The financing deal was announced by Venezuelan state oil company Petróleos de Venezuela S.A. or PDVSA.
Oil makes up about 95 percent of exports from Venezuela, which is Latin America's largest oil producer and a major supplier to the U.S.
San Ramon, California-based Chevron will invest the amount in Petroboscan, its joint-venture with PDVSA. The long-term funding by Chevron will receive Libor plus 4.5 percent, without any additional costs. The last term of repayment will be made in the year 2025.
The investment deal was reached after continued pressure from the Venezuelan energy ministry on nearly 20 joint-venture partners of PDVSA in various projects, to boost production by bringing in additional funding.
The invested amount will be used to carry out maintenance works and to boost the average daily oil production in the Boscan oil field. The amount will also be used to comply with the remedial plan as required by the Venezuelan People's Ministry of Petroleum and Mining.
The 20-year joint venture was formed in 2006 to operate the Boscan Field in Venezuela until 2026. Chevron is a minority shareholder in Petroboscan and holds a 39.2 percent interest in the joint venture. Chevron previously operated the field under an operating service agreement.
The Boscan Field in the state of Zulia in western Venezuela is operated by Petroboscan, and currently has an average output of 115,000 barrels of oil per day.
During 2011, Petroboscan's total daily production averaged 103,000 barrels of liquids (27,000 net) and 14 million cubic feet of natural gas (6 million net). In 2011, 18 development wells were drilled.
The joint venture was formed as part of the migration process promoted by the Ministry of Popular Power of Oil and Mining for conversion of existing operating services agreements that did not comply with the Hydrocarbons Law of 2001 into joint ventures.
CVX closed Wednesday's regular trading session at $107.88, up $0.45 or 0.42% on a volume of 5.52 million shares.
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by RTT Staff Writer
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