The $4 billion investment is in the Ayacucho 7 block, which has about 31 billion barrels of oil. The project would rival the scale of Sincor, a $4.2 billion joint venture run by Petroleos de Venezuela SA, the country's state oil company, which produces light, low-sulfur crude from the region's tarry deposits.
Production from Ayacucho 7 should begin in about two years, Rafael Ramirez, Venezuela's oil and energy minister, said in a statement from Petroleos de Venezuela.
Venezuelan President Hugo Chavez is working more with state oil producers from other countries after seizing control of heavy-oil ventures in the Faja from international companies. The country needs to increase drilling to prove and develop heavy- oil reserves in the region estimated at 260 billion barrels.
Sincor was one project taken over by Petroleos de Venezuela on May 1. The project's private partners, Total SA and Statoil ASA, worked out deals to remain in the project. Terms haven't been disclosed. ConocoPhillips and Exxon Mobil Corp. both left their projects June 26.
``It's more in the market's interest if someone comes in and tries to pick up some pieces after the majors leave,'' said David Mares, a professor at the University of California, San Diego who studies the South American energy industry. ``If the Iranians come in and can increase output -- with lots more capital, because they're less efficient than majors -- then the market benefits.''
To pay for the Iran joint venture, Venezuela can tap funds, where Chavez has moved as much as $25 billion from the central bank, taxes and oil royalty revenue, said Pedro Benitez, a professor of political economy at Metropolitan University in Caracas and a former adviser to Venezuela's delegation to OPEC.
The project's construction isn't guaranteed, he said.
``This government has signed a lot of agreements in recent years'' that haven't come to fruition, including promises to build refineries in Paraguay and Nicaragua, Benitez said today in a telephone interview. ``Petroleos de Venezuela may also lack the technical capacity to manage such a large project.''
During a visit by Chavez and Ramirez last week, Venezuela also agreed to help Iran with a shortage of gasoline.
``Iranians have requested to buy gasoline from us, and we have accepted their demand,'' Ramirez told the Tehran newspaper Shargh in an interview July 3. He declined to provide the amount of fuel requested.
Tankers, Oil Rigs
The tanker St. Michaelis loaded about 38,000 tons, or 300,000 barrels, of refined product for a trip to Iran on July 2, the first leased tanker to travel that route since October, according to Bloomberg data.
Iranian companies will build four Aframax tankers and offshore oil rigs, Petroleos de Venezuela said in today's statement. Offshore rigs are expected to be in place in the Gulf of Venezuela by the end of this year.
Venezuela and Iran also will form a joint company for projects in other countries, the statement said. Luis Vierma, Petroleos de Venezuela's vice president for exploration and production, said June 12 that his company may explore for oil and natural gas in Vietnam, Bolivia and Argentina.
Venezuelan leaders also have met in the past three months with energy ministers from Sudan and Myanmar, which are seeking foreign investment in oil and gas production.