Venezuela, India agree to build naphtha production unit

Friday, 20 Dec 2013 | 4:38 PM ET

CARACAS, Dec 20 (Reuters) - Venezuela and India have agreed to build a naphtha production unit in the South American OPEC nation in the latest sign of widening energy ties between the two countries, Venezuela's foreign minister said on Friday.

Foreign Minister Elias Jaua did not give further details about the deal, nor the size of the proposed unit. Several big Indian energy firms, including Reliance Industries, already work with Venezuela's state oil company PDVSA.

In brief comments carried by Venezuelan state TV, Jaua said the unit would be built in the Orinoco extra heavy oil belt. The naphtha, a liquid mixture of hydrocarbons, would then be mixed with the area's tar-like crude to produce lighter oil for export.

"These are joint investments aimed at producing the fuel, the primary material, required for the energy that India needs for its impressive industrial, scientific and technological development," Jaua said.

The joint construction of a naphtha unit would deepen trade ties that have grown in recent years as an increasing supply of Venezuelan crude flows to India. According to PDVSA's official figures, crude sales to India more than doubled to 366,000 barrels per day (bpd) in 2012, compared to 165,000 bpd the previous year.

Venezuela boasts the world's biggest crude oil reserves, much of them in the vast Orinoco belt. But its output of processed fuels was curbed by a gas leak and deadly explosion that struck its biggest refinery, Amuay, in August 2012.

Partly as result, Venezuela's imports of refined fuel products from the United States rose by almost a quarter to an average of 87,000 bpd between January and September this year, compared with the same period in 2012, according to the U.S. Energy Information Administration (EIA).

According to documents seen by Reuters, PDVSA has launched a tender to buy up to 8 million barrels of heavy naphtha for 2014, which covers part of its annual need.

(Reporting by Daniel Wallis in Caracas and Marianna Parraga in Houston; Editing by Paul Simao)