TEHRAN (Bloomberg) -- Iran and Venezuela, the producers of about nine percent of the world’s oil, will form a one-billion-dollar global venture for projects in countries where companies such as Royal Dutch Shell Plc. or Eni SpA are facing tougher business conditions.

Venezuelan-Iranian Oil & Gas Co., or VENIROGC, may be registered by the end of the year with its head office in a European country, Mohammad-Ali Talebi, chief of Venezuelan operations at Iran’s state-owned Petropars Ltd., said in an interview in Tehran.
“The idea of the company is to become the same as Chevron, Shell or Eni,” Talebi, a VENIROGC board member, said in the Petropars headquarters. “We’ll do the international oil and gas business along the entire value chain, from production to gasoline stations.”
Iranian President Mahmud Ahmadinejad and his Venezuelan counterpart Hugo Chavez have expanded cooperation outside the Organization of Petroleum Exporting Countries, to which they both belong.
VENIROGC will be a 50-50 partnership between state-run Petroleos de Venezuela SA and Petropars. Unlike existing ventures, it will focus on oil and gas developments outside the two countries, such as in Bolivia, Talebi said.
Spain and the Netherlands are being considered as possible sites for the company’s head office.
------------------- Banking sanctions
Talebi said he hopes the venture will be registered in the British Virgin Islands by the end of 2007. Its offshore address will make the company immune to any banking sanctions against Iran and allow it to attract loans on international financial markets.
Talebi declined to say how much money VENIROGC needs to raise initially, saying only it would be “no less” than one billion dollars for exploration and production.
“This is still a baby,” Talebi said. “You have to take good care of a baby.” Ahmadinejad and Chavez agreed to create the venture during a meeting in Caracas in September 2006.
“It’s very, very difficult to create something like that,” said Steven Dashevsky, co-head of equities at Moscow-based Aton. “It’s going to take a lot of time to get management and technology in place to be competitive with global majors.”
------------------------ ‘We’re friendly’
Petropars, a unit of National Iranian Oil Co., already has two agreements with PDVSA. One is for joint exploration of the Ayacucho 7 block in Venezuela’s heavy crude producing Faja del Orinoco region. If the wells are determined to be commercially viable, the two companies will develop it together, with PDVSA holding 51 percent of the venture, Talebi said.
Production may begin as early as 2011 and reach full capacity, or 200,000 barrels per day, after 2012, Talebi said. The two companies estimate that Ayacucho 7 will require 4 billion dollars of investment, should development go ahead.
A second project, exploring for natural gas in the Cardon 2 block in the Gulf of Venezuela, is still waiting for government approval, Talebi said. Chevron Corp. runs neighboring block 3.
“We have no hesitation to talk to them,” Talebi said, when asked if the proximity of a U.S. company caused any awkwardness because of American economic sanctions against Iran. “We’re friendly. We’re talking together, sharing information.”