Orinoco Heavy Oil Belt
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TOKYO (Dow Jones Newswires), April 6, 2009

Japan and Venezuela deepened ties Monday with a wide-ranging set of energy cooperation agreements and projects as a summit meeting between the two countries took place in Tokyo.

Japan's government-backed Japan Oil, Gas and Metals National Corp., or Jogmec, and five Japanese companies signed Monday agreements with Venezuela's state oil company Petroleos de Venezuela SA, or PdVSA, on joint energy study projects.

The signings followed a meeting earlier in the day between Venezuelan President Hugo Chavez and Japan's prime minister Taro Aso.

The agreements are about feasibility studies to develop Orinoco Tar and an offshore natural gas block, said officials from the Japanese companies.

Jogmec, Inpex Corp. (1605.TO) and Mitsubishi Corp. (8058.TO) signed an agreement on the Orinoco tar study, while Mitsubishi, Mitsui and Co. (8031.TO), Itochu Corp. (8001.TO) and Marubeni Corp. (8002.TO) separately signed agreements on a natural gas study.

Orinoco tar is a heavy hydrocarbon similar to oil sands that is seen in abundance in Venezuela's Orinoco basin. The Japanese entities said details such as scheduling and costs have not been decided.

The four Japanese trading companies who signed agreements on the gas block will study data to be released by Venezuela and probably suggest a development plan as a consortium about a month later, said Seiji Kato, Mitsubishi's energy group head.

Separately, a consortium led by the Japan Bank for International Cooperation is now considering loan facilities of up to US$1.5 billion for the revamp of two Venezuelan refineries including the Puerto La Cruz refinery, a senior official of an involved company said.

Earlier on Monday, Japanese Vice Minister of Economy, Trade and Industry Harufumi Mochizuki said that Japan and Venezuela have agreed to set up a task force to explore the possibility of joint development of oil and natural gas fields in the Latin American country.

On Sunday, Chavez told Venezuelan television that he will use the visit to seek Japanese investment in Venezuela, promote energy cooperation and establish a strategic alliance between the two countries, China's state-owned Xinhua news agency reported.

Japan wants to diversify its sources of energy and Venezuela wants to diversify its markets, "so we have a strong point in common," said the Venezuelan president, according to Xinhua.

In mid-March, Rafael Ramirez, Venezuela's energy minister, visited Japan and signed a memorandum of understanding with Japan on energy cooperation.

Japan relies on the Middle East for nearly 90% of its crude imports, and it wants to diversify its crude sources. The MOU was Japan's first energy pact with a South American nation.

For Venezuela, the agreement would help it diversify its base of buyers and reduce its reliance on U.S. customers, Ramirez said in the meeting.

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