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Rosneft increases stake in Venezuelan heavy oil venture

Rosneft increases stake in Venezuelan heavy oil venture

Report summary

Russian oil company Rosneft and Venezuelan NOC PDVSA have agreed to increase Rosneft's interest in the Petromonagas joint venture to 40% from 16.67%. Petromonagas is a heavy oil field located in the Carabobo area of the Orinoco belt. It has been in production since 1999. The JV operates an upgrader on the Caribbean coast which upgrades Petromonagas crude from 8.5° gravity API into 16.5° gravity API syncrude. The JV was formed in 2007, and Rosneft entered in 2013. Our valuation represents a significant premium to the US$500 million price which Rosneft paid. It is likely that both Venezuela country risk and oil price volatility were factored into Rosneft's valuation. PDVSA has been seeking foreign investment in its oil projects after being hit especially hard by low oil prices. Rosneft's financial outlook is solid, with the weaker rouble offsetting the effect of low prices. Rosneft has been looking to internationalise and this deal cements its partnership with PDVSA.

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The upstream oil and gas industry conducts activities against a backdrop of growing energy and environmental challenges. Political instabilities, international conflicts and government and environmental regulation have all impacted the production process.

This has forced companies to re-examine their corporate strategy, moving away from high-risk exploratory drilling to lower-risk exploration in mature basins as they search for increased returns.

This Upstream Oil and Gas Deal Insight report provides an in-depth analysis of this deal. You will also find information about upstream assets and the strategic rationale behind the deal.

For investors and businesses, this deal insight report provides an understanding of the effect this deal will have on the market, including oil and gas pricing and assumptions. Use it to keep up to date with deal announcements, gain expert insights and analyse potential developments that might affect your strategy.

Wood Mackenzie goes beyond company-reported data and announcements to give you an independent and informed view. Our unique valuation metrics are underpinned by our deep understanding of upstream assets and companies. We help you objectively benchmark and evaluate asset and corporate deals so you can compare deal economics around the world.

  • Executive summary
  • Transaction details
  • Upstream assets
    • Petromonagas
  • Deal analysis
  • Upsides and risks
    • Reserves upside
    • Operating risks
  • Strategic rationale
    • PDVSA
    • Rosneft
  • Oil & gas pricing and assumptions

In this report there are 7 tables or charts, including:

  • Executive summary
    • Executive summary: Table 1
  • Transaction details
  • Upstream assets
    • Upstream assets: Table 1
  • Deal analysis
    • Deal analysis: Table 1
    • Deal analysis: Table 2
    • Deal analysis: Table 3
  • Upsides and risks
  • Strategic rationale
  • Oil & gas pricing and assumptions
    • Oil & gas pricing and assumptions: Table 1
    • Oil & gas pricing and assumptions: Table 2
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