CARACAS -(Dow Jones)- All systems are go for a Venezuela oil drilling auction at the end of the month that would be the largest one here in more than a decade. If successful it could rescue the petroleum-rich country's dwindling output levels.

Consortiums have until Monday to indicate which of the seven available blocks in the Carabobo oil field they are interested in and who their partners would be, an Oil Ministry official said.

"Several documents have been received," said the ministry official, who asked not to be named. "There's been plenty of movement, plenty of interest."

Unless there are unexpected delays, the companies will deliver official bids to the government Jan. 28 and winners will be announced Feb. 10, the official said.

Companies that have shown interest include China National Petroleum Corp., or CNPC, California-based Chevron Corp. (CVX), France's Total (TOT) Spain's Repsol (REP), Royal Dutch Shell PLC (RDSA), Japan's Mitsubishi and India's ONGC ( 500312.BY).

All the companies will have to join forces with the state-run oil firm Petroleos de Venezuela, or PdVSA, which will control 60% of each block.

The blocks up for auction are located in a section of eastern Venezuela's Orinoco oil belt that contains massive amounts of heavy and extra-heavy, tar- like crude oil, the government has said. Within five years, the government hopes they could be producing a total of 1.2 million barrels a day. Each block could cost up to $20 billion to develop.

If output goals are met, this would give a huge boost to Venezuela's production levels, which are currently at about 2.2 million barrels a day, according to independent estimates. That's down from 3.4 million barrels a day a decade ago.

The government and PdVSA dispute the current estimates and say production levels last year were closer to 3.1 million barrels a day.

Oil accounts for more than one-third of gross domestic product in Venezuela, over half of government revenue and about nine-tenths of exports.

Although the government says there won't be any delays this time around, there are still lingering questions which had delayed the auction for nearly a year.

A drop in oil prices in 2009 forced the Venezuelan government and the oil companies to reassess the initial conditions.

Companies are concerned about a windfall tax that would increase when oil prices spike higher. The government has indicated its willingness to reduce the windfall tax, but there's nothing definite, according to a person familiar with the negotiations.

It's also unclear who would buy and sell the oil during the first few years of production. Because of its low quality, special plants must be built but until that happens, PdVSA would likely be the sole buyer.

But there are concerns about PdVSA's commitment to pay for the crude, especially after it fell behind on many payments to suppliers, contractors and partners in 2009. So, the consortiums would like to market some of the oil itself, to other buyers.

Despite those operational risks, sources say it looks like plenty of bids will still be presented, as the geological risks in Venezuela are virtually zero.

-By Dan Molinski, Dow Jones Newswires; 58-212-284-5651; dan.molinski@ dowjones.com