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CNPC in Venezuela

CNPC has been present in Venezuela since 1997 and now has oil and gas assets and equity in the country, while also providing oilfield services.
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In Venezuela, CNPC is involved in the development project of Caracoles and Intercampo oilfields, a joint-venture Orimulsion development project, the development and joint-venture operation of the Zumano Oilfield, and the development and joint-venture operation of Junin 4 block in the Orinoco heavy oil belt.

Caracoles and Intercampo Oilfields

In June 1997, CNPC won tenders for the Intercampo Oilfield and the Caracoles Oilfield, located on Maracaibo Lake and the East Venezuela Basin respectively. The Intercampo and Caracoles oilfields are two marginal oilfields that have been exploited for over 50 years, containing many faults, a complicated geologic structure, and a small scale. In less than three years, peak production of the fields has increased from 700 tons per day to 5,500 tons per day since CNPC's takeover. This was thanks to our advanced technologies in releasing the potential of mature oilfields and reconstructing them, as well as our excellent management. This has been described as "the CNPC model" by local oil companies in Venezuela.

In Intercampo Oilfield, the success rate of the horizontal well reached 100%, thanks to advanced technologies in geo-steering and directional drilling. 170 million tons of difficult-to-recover reserves have been brought into production as the result of the application of large borehole directional drilling. Meanwhile, CNPC improved oil well productivity and prolonged the sand control validity period through the use of complex sand control technology. In 2008, we established the most economically efficient means for field maintenance, thereby minimizing the composite decline rate of the oilfield and preserving stable production levels. In Caracoles Oilfield, progressive exploration and development and gas lifting operation were deployed to achieve a high and stable yield.

In 2011, the Intercampo–Caracoles project stabilized the production of the mature fields by improving its coordination with PDVSA and increasing the production from gas lift.

In 2016, the Caracoles-Intercampo project reduced the capacity of inefficient blocks and ensured that production was safe and well under control.

Zumano Oilfield

Zumano Oilfield is located in the East Venezuela Basin. On December 23, 2004, CNPC signed a cooperation agreement on Zumano Oilfield with PDVSA. In 2006, a joint venture agreement was signed between CNPC and PDVSA, with CNPC holding a 40% stake. In 2007, Venezuelan President Hugo Chavez signed a Presidential Order to transfer CNPC's rights in exploring and developing Zumano Oilfield to the joint venture Petrozumano.

In 2008, we focused on research to improve well drilling operations in order to increase production capacity. In 2009, thanks to measures such as the optimization of wells, restoration of mature wells and operation in different layers, the project’s daily output increased by 1,500 barrels.

In 2011, production of the Zumano Oilfield was stabilized thanks to comprehensive data study and optimized stimulation measures in old wells.

In 2016, the Zumano project reduced the capacity of inefficient blocks and ensured that production was safe and well under control.

MPE3 project (Orimulsion)

The Orimulsion Project includes the MPE3 Oilfield and an emulsification plant. CNPC and PDVSA established a joint-venture company in 2001, with CNPC owning a 70% stake. The whole project was completed and put into production in November 2006, producing 1.574 million tons of emulsified oil.

In 2008, in the MPE3 project, a new JV was established and the Phase I 6Mt/a productivity construction project progressed smoothly, increasing oil production by 2.12 million metric tons over 2007.

In recent years, the MPE3 project has been witnessing steady increase in its daily output by intensifying field management, speeding up drilling rate, optimizing oil well parameters and new well locations, and accelerating the drilling and commissioning of new wells.

In 2014, the MPE3 Project increased its crude output from 137,000 bbl/d at the beginning of the year to 163,000 bbl/d. In 2015, the 40,000 bbl/d production buildup project and a new diluting agent pipeline were put into operation. Currently the 10mt capacity expansion project is under construction in the MPE3 project.

Currently the 10Mt/a capacity expansion project is under construction.

Junin-4 Block

Orinoco heavy oil belt is located in southeastern Venezuela, covering 54,000 square kilometers. In August 2006, CNPC and PDVSA signed an agreement for joint exploration of the Orinoco Heavy Oil Belt's Junin-4 Block. The block witnessed smooth progress in reserve evaluation, with the completion of 11 exploration wells and 316 kilometers of 2D seismic data.

In May 2008, CNPC reached two agreements with PDVSA. A joint venture was established to drill for and upgrade the super-heavy oil at Junin-4 Block in the Orinoco heavy oil belt with a target annual productivity of 20 million tons, in which CNPC has a 40% stake. And a joint venture refinery will be built in China, in which CNPC has a 60% stake.The integrated upstream and downstream project of the Orinoco heavy oil belt saw significant new progress in 2008.

In 2010, we formally signed a joint venture operation agreement with PDVSA on Block Junin 4 in the Orinoco heavy oil belt.

CNPC provides a range of oilfield services in the country, including geophysical prospecting, well drilling and logging, as well as engineering and construction.

CNPC has provided 3-D seismic services and integrated acquisition of gravity, magnetic and electric data as well as directional well downhole services for PDVSA and CVP, won the bid logging and perforation contracts from PDVSA in Barines and east of Venezuela. We have also accomplished MIT casing test services for BP's project in Venezuela.

In 2012, we won contracts on 3D seismic, drilling, and offshore mud logging for the Block Junin-4 project. In 2014, China Huanqiu Contracting & Engineering Corp. signed the contract for the MPE3 capacity expansion project.

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In Venezuela, Raul Cuenca is a community dominated by farming and animal husbandry. Before 2007, 80% of local residents were in poverty and more than 70% were unemployed.

To help local residents improve their living conditions, the joint venture of Intercampo and Caracoles project invested USD 1.39 million to support local development. In 2010, the elementary school was reconstructed and expanded to accommodate 1,250 pupils, and it now has its own canteen and a baseball field. By the end of 2010, poverty in the community had been reduced by 30.3% and the employment rate increased to 39.6%.

In 2011, the Intercampo–Caracoles project team offered grants to three local primary schools and supported power upgrading, housing and drinking water programs for local communities.

In 2012, the MPE3 project team helped to build housing for communities surrounding the oilfield, benefiting 460,000 local residents.

In 2013, we invested nearly RMB 29 million in infrastructure and public welfare for local communities in Venezuela.

Providing training for local employees

CNPC Bohai Drilling Engineering Company has been operating in Venezuela for over a decade, with local employees accounting for more than 90% of its workforce. The company adopts a three-stage approach to skill training, i.e. induction training in the first stage, on-site training in the second stage, and advanced training for outstanding employees in China in the third stage. Those who have received the three-stage training are then able to train other local employees. This enables a training cycle that is more targeted and efficient. Meanwhile, the Chinese employees can also learn from experienced local employees in terms of improved management practices and techniques, thus creating a positive atmosphere in the workplace for the Chinese and Venezuelan employees to grow together.

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Jul. 21, 2014 CNPC signed a new fuel oil trading contract with PDVSA through the Joint Chinese-Venezuela Fund, under which CNPC will purchase an additional 100,000 barrels of fuel oil per day from Venezuela for three years since the date of signing.

Sept. 22, 2013 A framework agreement on jointly developing the Junin 10 Block was signed with the Ministry of Oil and Mining of Venezuela.

Dec. 1, 2010 CNPC signed an agreement on the joint-venture operation of the Junin 4 project with the Venezuelan Ministry of Energy and Petroleum.

May 09, 2008 CNPC and PDVSA signed two framework agreements on creating a joint venture to develop Junin-4 Block and on building a joint venture refinery in China.

Nov. 06, 2007 CNPC and PDVSA signed a memorandum of understanding with respect to the agreement on upstream and downstream integrated operations in the Orinoco heavy oil belt.

Aug. 2006 CNPC and PDVSA signed an greement to transfer the operation contract for Intercampo and Caracoles Oilfields to a joint venture.

Aug. 24, 2006 CNPC and the Venezuela Ministry of Energy and Mines signed an agreement for joint exploration for the Zumano Oilfield and a framework agreement on a joint venture between CNPC and PDVSA for joint exploration of the Orinoco Heavy Oil Belt's Junin-4 Block.

Dec. 23, 2004 CNPC signed a cooperation agreement on Zumano Oilfield with PDVSA.

Apr. 17, 2001 CNPC signed an Agreement on Orimulsion Cooperation with PDVSA.

Jun. 1997 CNPC won tenders for the Intercampo Oilfield and the Caracoles Oilfield.

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