Caracas, Venezuela — Russia will invest $5 billion to raise Venezuela's oil production by 1 million b/d under a new economic agreement, Venezuelan President Nicolas Maduro said Thursday. Receive daily email alerts, subscriber notes & personalize your experience. "We have signed contracts to guarantee investments of more than $5 billion with our Russian partners in joint ventures to raise oil production," Maduro said on Venezuelan state TV channel VTV. Venezuela pumped 1.18 million b/d in October, according to the latest S&P Global Platts OPEC production survey, down from 2.09 million b/d two years ago. The agreements would involve joint ventures between Venezuela's state-owned company PDVSA and its Russian partners in Venezuela, although Maduro did not specify which companies would be involved. Maduro made the announcement during his visit to Moscow. After a meeting with Russian President Vladimir Putin, Maduro also said Russia will supply 600,000 mt of wheat to Venezuela in 2019. Maduro said mining contracts with Russian companies were also signed, including a $1 billion investment for the production of gold, in addition to possible investments in diamond mining. "These agreements put us in an advantageous situation to stabilize the Venezuelan economy between 2016 and 2025," Maduro said. Neither the Kremlin nor Rosneft, which is the most likely partner in the oil deal, released anything on the issue. Both were unavailable for comment. Rosneft has stakes in five Venezuelan oil projects with PDVSA: Petromonagas, Petrovictoria, Petroperija, Boqueron and Petromiranda. Gazprom Bank has stakes in the Petrozamora project with PDVSA. According to Patricia Ventura Nicolas, senior analyst with IPD Latin America, the Russian joint ventures with PDVSA are expected to produce an average of 234,000 b/d in 2018. "Taking into account all of Venezuela's challenges it is difficult to see increasing production soon," she said. "Although, it is difficult to say with certainty without looking at the business plan for this investment." "That $5 billion, based on past experience, is going to be disbursed over time," Ventura said. However, this investment will hardly solve the country's lack of diluent, and challenges PDVSA faces stemming from unreliable power, human resources and cash flow, she said. The only joint venture working on start-up projects are Rosneft's Petromiranda and Petrovictoria. Both are operating in the Orinoco Heavy Oil Belt. Petrovictoria has better geology than Petromiranda, making it a better candidate for investment dollars, she said. However, a lack of diluent prevents extra-heavy oil output from increasing at the Orinoco Belt, she added. Last year, Rosneft began production at the Petrovictoria. This joint venture plans to drill 571 wells in the North Carabobo 2 and C40 blocks in the Orinoco, reaching a total production of around 400,000 b/d, PDVSA has said. According to Rosneft, the engineering of permanent infrastructure for Petrovictoria began earlier this year. Rosneft also signed an agreement with the Venezuelan government to create a JV in the Patao, Mejillones and Rio Caribe offshore gas fields, located on the Paria peninsula in the eastern part of the country. Russia has become a major financier of the struggling South American nation. According to Reuter's estimates, the Russian government and Rosneft have lent Venezuela at least $17 billion since 2006. In November, Rosneft gave an update on Venezuelan payments, announcing it has cleared $1.5 billion of prepayments in the first nine months of 2018, with a total of $3.1 billion still outstanding. -- Mery Mogollon, newsdesk@spglobal.com -- Daniel Rodriguez, newsdesk@spglobal.com -- Edited by Jeff Mower, newsdesk@spglobal.com
Venezuela has announced plans to increase its oil output by two bpd following a $ an additional $1bn investment from Russia . The deal, which will comprise joint ventures between Venezuela 's state-owned firm PDVSA and undisclosed Russian companies working in the country, aims to provide increased stability to Venezuela 's economy. The two countries also agreed an additional $1bn investment for gold mining projects, while Venezuela will also export 600,000 mt of wheat to the country 2019 .