Venezuela inked a deal with Russia to develop an extra-heavy oil block in the eastern Orinoco region that could eventually produce 450,000 barrels a day, state-run Petroleos de Venezuela, or PDVSA, said in a statement Monday.

The 448-square-kilometer Junin 6 block, with some 53 billion barrels of reserves, will require $18 billion in investments and peak production will be reached around 2017, the PDVSA statement said.

The Venezuela-led project will see PDVSA in control of 60% of the joint venture, with a consortium of Russian firms holding the remaining 40%. The members of the consortium are Rosneft (ROSN.RS), OAO Gazprom (GAZP.RS, OGZPY), Lukoil Holdings (LKOH.RS, LUKOY), Surgutneftegas (SNGS.RS), and TNK-BP Holding (TNBP.RS), PDVSA said.

"This is the beginning of an important joint project, one I'm certain will pay dividends to our Venezuelan colleagues and their Russian partners," Russian Prime Minister Vladimir Putin said Monday, according to the PDVSA statement.

Russia's Prime-Tass news agency reported the deal earlier Monday.

PDVSA said the Russians will have to pay a $1 billion signing bonus to the Venezuelan government to participate in the project.

The deal, signed in Moscow, comes days after Venezuela signed a similar deal with Italy's ENI SpA (ENI.MI, E) to develop the neighboring Junin 5 block.

The Junin 5 project is also an $18 billion deal, though peak production there is expected to be much less, at around 240,000 barrels a day by 2106.

The Junin projects with the Russians and the Italians are separate from Venezuela's Carabobo auction, in which the South American country will award to the most attractive bidders seven promising blocks that are split into three areas.

The Carabobo blocks are also in the Orinoco region.

Bids were received on the Carabobo project last week by one consortium that includes Chevron Corp. (CVX), and another consortium that includes Spain's Repsol YPF SA (REP, REP.MC), India's Oil and Natural Gas Corp. (500312.BY) and Malaysia's Petroliam Nasional Bhd., or Petronas.

Results of the auction are expected to be announced Feb. 10.

-Dan Molinski, Dow Jones Newswires; 58-414-120-5738;

dan.molinski@dowjones.com
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