While it is becoming more and more difficult to find new conventional oil fields, the importance of extra-heavy oil in Venezuela and bitumen in Canada has been increasing. Recently, there were two remarkable events occurred in Orinoco development in Venezuela. One is the reserve evaluation project based on inter-government agreements. Some groups have created joint venture companies with PDVSA to enter into development phase after the reserve evaluation work. The other event was the first competitive bidding for Carabobo area development. Two projects were awarded as a result of the bidding process including the project led by Chevron with the participation of JOGMEC, Mitsubishi Corporation and INPEX Corporation. Orinoco development has an advantage over oil sand development in Canada in terms of lower production cost because cold production is the standard method due to relatively low viscosity of oil. However, the severe and unstable investment climate in Venezuela is making it difficult for foreign oil companies to invest in big projects. The development of oil sand in Canada will grow steadily if high oil price continues and appropriate measures are taken to minimize environmental impacts such as carbon dioxide emission, land damage and byproduct disposal. The development of extra-heavy oil in Orinoco, Venezuela can be called as “Frontier” even though certain improvements in investment environment are required to encourage new project startups.
