ONGC Videsh Ltd and its partners will next week sign contracts for developing a giant oilfield in Venezuela that will give energy deficient India 3.6 million tonnes a year of crude oil.

“The contract for the Carabobo-1 project will be signed on May 12,” a company official said.

Venezuelan President Hugo Chavez and India Oil Minister Murli Deora are likely to witness the signing at Caracus.

ONGC Videsh Ltd — the overseas investment arm of Oil and Natural Gas Corp (ONGC) — and its partners, Indian Oil Corp (IOC) and Oil India Ltd, will invest $2.181 billion in the 400,000 barrels per day (20 million tonnes a year) project over the next five years.

The official said Indian firms hold an 18 per cent stake in the Carabobo-1 project, which will be operated by Spain’s Repsol-YPF and Petronas of Malaysia.

The Carabobo-1 project of the Orinoco extra-heavy oil belt of Venezuela will involve a total investment of close to $21 billion over 25 years. The three firms will invest $2.181 billion during the 2010 to 2015 period and may be able to fund most of the future investment from the revenues they will start earning when the project goes onstream in three years.

In February, the Indian trio won rights to develop the Carabobo-1 project along with Repsol-YPF and Petronas after committing themselves to pay a signing amount of $1.05 billion and making an equivalent amount available to Venezuela’s state-run PdV as a loan.

Repsol-YPF, OVL and Petronas will each hold a 11 per cent stake in the ‘mixed company’ that will develop Carabobo-1, while seven per cent will be split between IOC and OIL. The remaining 60 per cent participating interest will be with PdV.

The project will give India 3.6 million tonnes of crude oil annually out of the envisaged output of 400,000 barrels a day.

Of the initial investment, OVL will invest $1.333 billion, while IOC and OIL will invest $454 million each.

The Carabobo-1 project, comprising the Carabobo-1 Central and Carabobo-1 North blocks, will develop extra-heavy crude production capacity of up to 400,000 barrels per day (20 million tonnes a year). Early output of at least 50,000 bpd is slated to start in 2012-13, before rising to its peak in 2016.