Reuters, 05.01.03, 12:00 PM ET

NEW YORK, May 1 (Reuters) - Venezuela's foreign-financed Cerro Negro extra-heavy oil project is back at full capacity after recovering from a stoppage during a national workers' strike earlier this year, project partner Exxon Mobil Corp. (nyse: XOM - news - people) said on Thursday.

"We're back at full production at Cerro Negro," Exxon Mobil spokesman Pat Mulva said in a conference call with analysts.

Exxon Mobil is partnered with state oil firm Petroleos de Venezuela (PDVSA) in the Cerro Negro joint venture.

The project has the capacity to process 120,000 barrels per day (bpd) of extra heavy oil from the Orinoco region into 108,000 bpd of light synthetic oil. Cerro Negro and three other projects which upgrade Orinoco oil were halted by an oil strike between December and February.

The Cerro Negro disruption reduced Exxon Mobil's first quarter oil production by 35,000 bpd, Mulva added.

The four Orinoco projects, which partner PDVSA with international oil firms, had been producing over 400,000 bpd of Venezuela's total output of 3.1 million bpd in November.

<a href=ogj.pennnet.com>Oil & Gas journal By OGJ editors

HOUSTON, Apr. 28 -- A fire that broke out at midnight Saturday night shut down one of the four hydrodesulfurization units at the Petroleos de Venezuela SA 940,000 b/d Paraguana refinery complex 350 miles from Caracas in Venezuela's western state of Falcon, Caracas television media reported Sunday. No one was injured.

The fire occurred in the 84,000 b/d unit of the complex's Amuay refinery but it was limited to the one unit, which is expected to be back in service within 3 weeks, PDVSA's refinery spokesman said Sunday.

Meanwhile, three other hydrodesulfurization units at the complex will offset the loss in output, the spokesman said.

In another incident in western Venezuela, three refinery workers were seriously injured in an explosion Saturday at the Superoctane methyl tertiary butyl ether production unit at the Jose petrochemical complex, local media reported Sunday. Details were unavailable.

<a href=ogj.pennnet.com>Oil & Gas journal By OGJ editors

HOUSTON, Apr. 28 -- Intevep, the research and development subsidiary of Venezuela's state oil firm Petroleos de Venezuela SA, is evaluating its strategy regarding how to best fulfill the needs of the Venezuelan oil industry.

Argenis Rodríguez, adviser to Intevep Pres. Fernando Puig, told OPEC News Agency that Intevep's s 2003 research budget is $77.5 million.

"PDVSA's technological arm is more alive that ever," Rodríguez said during a recent visit to the 195,000 b/d Puerto de la Cruz refinery. He discounted suggestions that Intevep might disappear or be annexed by the Science and Technology Ministry.

Despite Venezuela's general labor strike, Intevep maintained constant support to the country's refining complexes, Rodríguez said.

<a href=ogj.pennnet.com>Oil & Gas Journal By an OGJ correspondent

RIO DE JANEIRO, Apr. 28 -- Brazil's President Luiz Inácio Lula da Silva and Venezuela's President Hugo Chávez reported that negotiations have been renewed to establish wide-ranging partnerships between state-owned oil firms Petroleo Brasileiro SA (Petrobras) and Petroleos de Venezuela SA.

The former administration of President Fernando Henrique Cardoso had started more modest negotiations, but they were never formalized.

The announcement was made after a meeting between the two presidents Friday in Recife, the capital of Brazil's northeastern state of Pernambuco. Chávez's visit to Brazil was his third since Lula took office on Jan. 1, but was the first meeting specifically used to discuss business, and not politics.

For years, Brazil was little more than a customer for Venezuelan oil, but after the meeting, the presidents stated they had "interests in common in the oil sector" and they "intend to expand cooperation."

Commercial partnerships The commercial alliance ratified a mutual cooperation agreement between the two countries for the development of the petroleum industry. It was decided that the areas of cooperation would occur in refining and commercialization of heavy crude, exploration and production in Venezuela, technological exchange of ideas, and joint activities in the areas of petrochemicals and natural gas.

"We want to refine oil in or as close to Venezuela as possible in the Caribbean, in the Andes, or here in Brazil," Chávez said, adding, "We can refine all this oil here and sell gasoline not only in South America but also in the Caribbean and Africa."

Brazil's Foreign Relations Ministry said that under Lula's administration, negotiations took place in Caracas during Mar. 27-8. On Apr. 14, a Venezuelan mission headed by Venezuela's Mines and Energy Minister Rafael Ramirez, including PDVSA Pres. Alí Rodríguez Araque, met with Brazil Mines and Energy Minister Dilma Roussef and Nestor Cerveró, Petrobras's international director, and inked a protocol of intentions to expand business in the sector.

Representatives from PDVSA and Petrobras organized groups to carry the decisions made at the meeting. The exchange of ideas and information will enhance the potential and synergies already identified by the two companies, according to a Petrobras source.

New refineries Petrobras also announced the construction, either alone or in partnership with PDVSA, of a new refinery in northeast Brazil with an output of 150,000 b/d of oil. The refinery is expected to cost some $2 billion.

The refinery is a long-standing economic development idea to meet the needs of Brazil's north and northeast, a vast poverty-stricken region with a population of 40 million.

The refinery is expected to come on stream in 2007. According to Rogerio Manso, Petrobras director of supply, the refinery will be the first in Brazil to have the capacity to process heavy crude oil, which is currently being exported.

Eleven of the 13 refineries in Brazil are owned by Petrobras and were built at a time when Brazil imported most of its crude from the Middle East; most of the oil produced in Brazil is heavy.

Even before the construction of the refinery, Petrobras intends to increase its refining capacity by 200,000 b/d by 2007, with investments of some $5.5 billion to upgrade refineries already operating.

Brazil processes some 1.62 million b/d of crude oil and Petrobras is working to increase this figure to 1.82 million b/d of refined products by 2007. Petrobras is importing about 190,000 b/d of oil products.

Line of credit Brazil's National Economic and Social Development Bank (BNDES) has opened a 2-year, $1 billion line of credit for Venezuela to use to purchase from Brazil oil platforms, turbines, locomotives, machinery, engineering services, and irrigation technology, plus other equipment.

The BNDES had previously provided financing for construction works such as an Orinoco River bridge in Venezuela.

Last December Petrobras shipped 82 million l. of gasoline to Venezuela, as requested by the Venezuelan government, by outgoing President Cardoso, to ease the fuel's shortage caused by the months-long PDVSA strike.

Venezuela's economy has slipped into sharp recession after a year of political conflict between Chávez and opponents demanding early elections in the world's fifth largest oil exporter. The nation's economy contracted nearly 9% in 2002 and many economists are forecasting a double-digit contraction for this year after a grueling opposition strike disrupted the oil shipments that account for half of the government's revenues.

The BNDES loan is based upon a solid collateral: Venezuela's vast oil reserves, analysts reported.

The Venezuelan and Brazilian governments are negotiating other deals for the downstream sector. Either Petrobras purchases or associates itself with one of PDVSA's refineries in the US or PDVSA associates itself with a Brazilian refinery.

The state of Pernambuco itself has inked a protocol of intentions with PDVSA to build a $2 billion refinery with an output capacity of 200,000 b/d.

Sources close to Brazil's mines and energy ministry told OGJ that Venezuela is interested in closing partnerships worth some $3 billion within Brazil's petrochemical sector, which is on firmer ground than Venezuela's.

The two governments also are discussing the possibility of Venezuela transporting natural gas to Carajas in Brazil's northern state of Para. Brazil is one of the world's largest exporters of iron ore, most of which comes from Carajas through Cia. de Ferro Vale do Rio Doce.

By Peter Wilson

Caracas, April 28 (<a href=quote.bloomberg.com>Bloomberg) -- Super Octanos SA, one of Venezuela's largest petrochemical companies, said one of four workers injured in Friday's explosion and fire has died, the plant's first fatality in 11 years, El Nacional reported.

Super Octanos, which produces methyl tertiary butyl ether, a gasoline additive used to boost octane and add oxygen to make fuel burn cleaner, remains shuttered. Unidentified officials gave no indication when it would restart operations, the newspaper said.

The fire and explosion may have resulted from a leak in one of its systems, releasing oil components into the atmosphere, the paper said. Super Octanos is a joint venture among Venezuela's state petrochemical company Pequiven SA, Italy's Ecofuel and Venezuela's Mercantil Servicios Financieros.

The plant, in the eastern state of Anzoategui, has the capacity to produce 600,000 metric tons a year.

(EN 4-28, B14) To see El Nacional's Web site, click on {NCNL } Last Updated: April 28, 2003 08:36 EDT