Hopewell Radebe
3 September 2008
Johannesburg — PETROSA is ready to send a team as early as next month to assess the possibility of drilling for oil in Venezuela following the energy co-operation agreement signed yesterday with the Latin American country, CEO Sipho Mkhize said.
The agreement is a breakthrough for SA, which is diversifying its sourcing of the crucial commodity from the Middle East. The deal is the first that gives state-owned PetroSA access to Venezuela's Orinoco oil fields, believed to have an estimated 1700-trillion barrels of oil reserves.
President Thabo Mbeki said yesterday that the deal agreement between SA and Venezuela will would enable SA to reduce costs by cutting out the middleman in its acquisition of oil. However, details of the deal were yet to be finalised as it also entailed broader co-operation in other aspects of energy development.
Mkhize said according to the agreement, PetroSA would be allowed to go into fields where it is known that oil exists. Once the groundwork of assessing the specific block that would be allocated to PetroSA is done and actual drilling gets started, the potential for the company to grow was so huge that some of the oil drilled would be sold internationally.
"We're also interested in the exploration of some of the mature fields that were deemed expensive to drill and abandoned. But with the (availability of) new technology and equipment for an accurate assessment of these fields, we believe that the demand in the market is conducive to make the business economically viable," Mkhize said. He said PetroSA would send a team of experts and they should have a report on the viability of the adventure ready in six to 18 months.
PetroSA also planned to explore new fields in Venezuela, but this would probably take seven to 10 ten years to determine whether an investment was worth it.
Mkhize cautioned against reports that SA was to buy oil in Venezuela that would be cheaper than the market value, saying there was no such contract. But he agreed with Mbeki that business between the state-owned oil companies would reduce costs at a later stage by cutting out the middleman.
Venezuelan President Hugo Chavez, on a state visit to SA, yesterday touted the agreement as an example of southern nations co-operating in a strategic alliance that will see them begin to define their destiny and discard their colonial past. He said it was imperative that developing countries unite behind a "new strategic agenda, to conduct a true strategic change in international relations".
"It will be a wonderful day when the first Venezuelan tanker will stop by to leave oil for SA," Chavez said.
He said Venezuela was interested in using SA's oil storage capacity of about 45-million barrels and helping to expand its refining capacity. His country was also co-operating with many Latin American and Caribbean countries to build oil-refinery capacity to reduce dependence on the west.
Venezuela has co-operated to restore the refineries abandoned by the Russians in Cuba and has been building others in Nicaragua, Jamaica and Brazil, among others.
Be the first to Write a Comment!
Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
