ENI and PDVSA Joint Venture
My last post was on the potential of Venezuela’s heavy oil reserves. As if by magic, almost immediately we have news of a major new development. ENI and PDVSA are to form a Joint Venture to exploit a major heavy oil field.
Under the terms of the agreement, which will be finalized in the next 60 days and submitted to the relevant approvals, PDVSA will hold 60% and Eni 40% of a joint venture company (Empresa Mixta ) to develop the Junin 5 field which has 35 billion barrels of certified oil in place.
Despite the blusterings of Venezuela’s Caudillo, the country needs the knowhow of foriegners in order to exploit these reserves. This is made explicit in this deal.
The Technology Agreement will also provide PDVSA access to Eni’s gas shale experience in the US Barnett basin.
It is this knowledge that opens the door for ENI in this very difficult market. It is intellectual capital that will drive oil company profits in the future, including lots of knowledge that is not actually patentable, and resides in the grey matter of the operational staff. As such, the market has changed from one where access to reserves is the key, and this has major consequences for everyone in the business.
