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Financial Times: Eni to put $4bn into Venezuela oil project

By Ed Crooks and Megan Murphy in London
Published: March 1 2008 02:00 | Last updated: March 1 2008 02:00

Eni, the Italian oil and gas group, plans to invest $4bn in Venezuela, the biggest commitment to the country by a western oil company since President Hugo Chávez began to take control of its oil projects in 2005.

Eni has reached agreement in principle with PDVSA, Venezuela’s state-owned oil company, to develop an area of the Orinoco belt, one of the world’s largest oil reserves.

The deal is the most concrete sign yet of Venezuela’s enthusiasm for foreign investment to revive its ailing oil industry. It also reflects Eni’s strategy of being among the first big oil companies to invest in politically risky countries.

The investment would expose Eni to the risk of further expropriation by Mr Chávez, while giving it increased access to Venezuela’s huge reserves ahead of its European and US competitors.

Paolo Scaroni, Eni’s chief executive, and Rafael Ramirez, Venezuela’s energy minister, were expected to sign the deal in Caracas last night, in the presence of Mr Chávez and Massimo D’Alema, Italy’s foreign minister.

Eni has only just resolved its dispute with Venezuela over the Dacion oilfield, where the government took control in 2006.

Other western oil companies, including StatoilHydro, Total and Royal Dutch Shell, have signed preliminary agreements to look at investment in Venezuela.

Eni hopes to begin production at a rate of 30,000 barrels per day in 2010, and step up to 300,000 b/d by 2014.

PDVSA would have 60 per cent and Eni 40 per cent of the joint venture. The total investment is estimated at $10bn.

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