Repeats, fixes headline to say "UPDATE 2" instead of "WRAPUP
1"

 * Venezuela to award blocks in vast Orinoco oil belt

 * Repsol says wins one project, Chevron seen winning also

 * Biggest oil investment opportunity under Chavez

 * Comes less than three years after nationalization wave

(Recasts, updates with Repsol, Chevron set to win projects)

 By Brian Ellsworth and Marianna Parraga

 CARACAS, Feb 10 (Reuters) - Venezuela was to award the
largest oil investment of President Hugo Chavez's 11-year rule
on Wednesday, drawing tens of billions of dollars of
much-needed foreign finance to the Orinoco Belt just three
years after the leftist leader nationalized operations there.

 Groups led by U.S.-based Chevron (CVX.N: Quote, Profile, Research) and Spain's Repsol
(REP.MC: Quote, Profile, Research) looked set to win the contest to tap into the OPEC
member's 100-plus billion barrels of reserves. Oil giants are
eager to replenish waning reserves.

 Caracas even softened some of its fiscal terms. Falling oil
prices have forced Venezuela and other producer nations to seek
partnerships from companies they marginalized during a
five-year commodities boom.

 An official from Repsol said a consortium it belonged to
had won Project 1 of the bid. Repsol will take 11 percent in
the project, the same stake as consortium partners Petronas
(PETR.KL: Quote, Profile, Research) of Malaysia and ONCC (ONGC.BO: Quote, Profile, Research) of India.

 Chevron, Venezuela's Suelopetrol and Japanese companies
Mitsubishi, Jogmec, Inpex (1605.T: Quote, Profile, Research) won Project 3, a souce from
that consortium told Reuters.

 This would leave a third block open, which Venezuela could
assign directly to another interested company.

 The official results are to be announced later on Wednesday
in a ceremony to include Chavez.

 "It's extremely hard not to see this as a success,
especially given the level of risk aversion and the complete
lack of private investment in the oil industry in more than a
decade," said Eurasia Group analyst Patrick Esteruelas.

 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

 Timeline of Venezuela's oil industry: [ID:nN09244390]

 Factbox on Carabobo oil field auction: [ID:nN09248426]

 Venezuelan oil production: link.reuters.com/cud68h

 Map of Carabobo field: link.reuters.com/dud68h

 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

 Venezuela's Carabobo oil tender includes three projects
slated to produce 1.2 million barrels per day following years
of slumping oil production in the OPEC nation, though the new
facilities may not do much to increase the country's total
exports due to declining output at older fields.

 The auction's winners will have a major opportunity to gain
access the Orinoco region, which the U.S. Geological Survey
recently called one of the world's largest crude reserves.

 "The Orinoco is Venezuela's oil future, and therefore the
country's economic future," said Roger Tissot, consultant with
Gas Energy Latin America.

 "If PDVSA would have had the money to do everything alone,
they would have tried to do so -- but they cannot. They have
financial and also I would guess human resources limitations."

 Venezuela holds the world's fifth-largest oil reserves at
an estimated 100 billion barrels, according to the BP
Statistical Review. The Venezuelan government says it holds at
least 177 billion barrels that could yet be produced.

 PROJECT RISKS

 The companies face a host of risks including a major
financing burden, a massive infrastructure buildout in isolated
areas that in some cases have no roads, and the risk that
Chavez could launch another wave of state takeovers.

 The leftist leader in 2007 took over operations of four
Orinoco projects run by private oil companies, leading U.S.
giants Exxon Mobil (XOM.N: Quote, Profile, Research) and ConocoPhillips (COP.N: Quote, Profile, Research) to leave
the country and sue for compensation.

 Industry sources said the government did not receive bids
from several companies Chavez has openly courted. They include
China's CNPC; Russian firms such as Lukoil (LKOH.MM: Quote, Profile, Research) and
Gazprom (GAZP.MM: Quote, Profile, Research); and Shell (RDSa.L: Quote, Profile, Research), which has proprietary
technology for heavy oil production.

 This is likely due in part to Venezuela running a parallel
process of direct adjudication for blocks in the Junin area of
the Orinoco belt that boasts solid reserves but is considered a
less attractive production area.

 Venezuela offered Junin blocks to Italy's Eni (ENI.MI: Quote, Profile, Research),
CNPC and a consortium of Russian companies including Lukoil --
possibly explaining why these companies did not put in offers
for Carabobo fields -- who each agreed to invest close to $20
billion dollars to develop projects in the area.
 (Editing by Andrew Cawthorne, Jonathan Leff, Marguerita Choy
and David Gregorio)