Colombia's richest man Jaime Gilinski is to convert the rights to a large oil field in Venezuela into a controlling stake in Latin American company GeoPark Ltd. The stake is valued at about $500 million, Bloomberg reports.
The deal is related to the Bare field in the Orinoco River belt. Gilinski signed a 25-year development contract with the Venezuelan government in September. According to Bloomberg, the rights to the field were acquired for a minimal upfront cost, and then negotiated for a stake that will give Grupo Gilinski control of GeoPark.
Production Restoration Plan
Bare is a heavy oil field with estimated reserves of 15.7 billion barrels. GeoPark plans to start work on the field in December. The company will try to restore up to 1,100 existing wells, and in the next stage it plans to drill about 80 new horizontal wells.
“This is a very significant investment in terms of capital and costs to maximize production recovery“, said GeoPark CEO Felipe Bayon, quoted by Reuters.
According to Reuters, Bare is GeoPark's first project in Venezuela. The company plans to use existing wells and infrastructure to restore production in stages. Details of the overall investment plan and expected yield are part of the subsequent development of the project.
From banking and food to oil
Jaime Gilinski's fortune is estimated by Bloomberg at $40 billion. He made his initial fortune in the banking sector, and in recent years has expanded his business into the food industry.
Gilinski has acquired control of Nutresa SA, the largest producer of packaged foods in Latin America. The company produces coffee, biscuits and other food products, which the businessman plans to supply to the Venezuelan market.
The Bare deal expands Gilinski's presence in the energy sector and simultaneously turns GeoPark into the operator of a major project in Venezuela. For the company, the contract is an opportunity to enter a market with huge oil resources, but the actual recovery of production will depend on the condition of the wells, the infrastructure and the implementation of the agreed program.
Sources: unian.net, bloomberg.com, aol.com