CARACAS – State-owned Petroleos de Venezuela SA and Italian counterpart ENI have reached agreement on a $17 billion oil project in Venezuela’s Orinoco Belt.

The CEOs of PDVSA, Rafael Ramirez, and state-controlled ENI, Paolo Scaroni, also signed a memorandum of understanding for the construction of a 1,000 MW thermoelectric plant in the eastern Venezuelan state of Sucre.

Venezuelan President Hugo Chavez presided over Tuesday’s signing ceremony in Caracas and hailed the bonds of friendship and understanding between Italy’s government and his own.

Scaroni, meanwhile, described as a dream come true ENI’s share in the joint venture, in which PDVSA will have 60 percent of the shares.

The companies will operate a 424-square-kilometer (164-square-mile) area of the Junin 5 block and could begin producing roughly 75,000 barrels of crude per day in 2014.

Chavez noted that the U.S. Geological Survey recently put the amount of recoverable heavy crude in the Orinoco Belt at 513 billion barrels, meaning Venezuela holds the world’s biggest oil reserves.

That U.S. government agency said in its assessment, released Friday, that that oil region of eastern Venezuela was the largest accumulation its technicians had ever assessed.

PDVSA had earlier estimated that the Orinoco Belt had 1.3 trillion barrels of oil but that only 280 billion was technically recoverable.

But the USGS study, the first to provide a precise estimate of the amount of oil technically recoverable with current technology and methods, says the area is twice as crude-rich and therefore puts Venezuela’s reserves well ahead of Saudi Arabia’s total of 266 billion barrels. EFE