UPDATE: Indian Consortium May Bid For Venezuelan Oil Block

(Adds details, quotes, background on Venezuelan licensing round)

NEW DELHI -(Dow Jones)- Four Indian energy firms are considering a joint bid to acquire a minority stake in one of the Orinoco blocks that Venezuela is offering to foreign investors, said an executive from Oil & Natural Gas Corp. (500312.BY), which is leading the Indian consortium.

ONGC plans to partner India's largest company Reliance Industries Ltd. (500325.BY) to bid for the block, whose development could cost $16 billion to $18 billion, said the executive who did not wish to be named.

"The actual development costs could be higher than that so we want to form a strong consortium. The oil upgradation facility itself can cost more than $6 billion. We're looking for a 40% stake overall - between the four of us," he said.

The ONGC-led consortium is studying the prospectivity of three blocks out of the seven heavy oil Carabobo blocks in the Orinoco belt that are on offer, said another executive from ONGC's overseas unit - ONGC Videsh Ltd.

ONGC and Reliance Industries may get a 15%-20% stake each in the block. State-run refiner Indian Oil Corp. (530965.BY) is seeking a 2.5%-5% stake and Oil India Ltd. could get a 2.5% interest as part of the consortium.

The consortium may propose to ship the Venezuelan crude back to India to be processed at local refineries.

"We want to bring back the crude and process it in Jamnagar and Paradip (refineries)," the ONGC executive said. The block can support a production rate of 200,000 barrels a day to 400,000 barrels a day, he said.

Others in the fray for the Venezuela blocks include China National Petroleum Corp., China's top oil and gas producer and the parent of PetroChina Co. (PTR), and China Petrochemical Corp., or Sinopec Group.

Petroleos de Venezuela SA, or PdVSA, gave 19 foreign oil companies access to key geological information as part of the licensing round in December, including the U.K.'s BP PLC (BP) and U.S. oil company Chevron Corp. (CVX).

Venezuela's government says the area contains 272 billion barrels of recoverable reserves, and it needs to attract foreign investors to help shoulder the huge financial burden needed to extract the oil - something Caracas can't do alone at a time of relatively low oil prices and reduced revenues.

Once selected, companies would partner with PdVSA in three separate joint venture companies that would pump, upgrade and sell the oil. The ventures would build three upgrading plants that would turn the heavy, sulfurous oil into a more marketable crude for export.

-By Gurdeep Singh, Dow Jones Newswires; +91-98739 35881; gurdeep.singh@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?... You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

April 09, 2009 08:44 ET (12:44 GMT)

Copyright (c) 2009 Dow Jones & Company, Inc.