Russian oil giant Rosneft (ROSN.RS) will pay Venezuela $1.1 billion to take part in a joint oil-extraction venture in the crude-rich southeast, Energy Minister Rafael Ramirez announced Wednesday.

That payment would come on top of an earlier agreed $1.5 billion worth of financing provided by the Russian firm for the project, Mr. Ramirez said.

"The Russian company will have to make a bond payment to the government in the amount of 1.1 billion dollars for it participation" in the venture, the minister said during a news conference.

The deal was signed between Rosneft , Russia 's leading oil producer, and Petroleos de Venezuela S.A. , the state-owned oil and natural gas concern.

The project seeks to develop oil fields in the Orinoco region, an area of vast potential crude reserves that the minister said could total some 22 billion barrels.

Much of the cost of extracting the oil will fall to Rosneft, which stands to earn 40% of the proceeds, a handsome return on its investment given the estimated value of the unextracted oil of more than $14 billion.

Rosneft is one of several Russian companies active in Venezuela as the cash-strapped country seeks the aid of outsiders to help develop its aging oil extraction industry.

Venezuela is South America 's largest oil exporter and has the world's largest proven reserves.

Caracas said it produces about three million barrels of oil per day, according to official data, although OPEC places the figure at closer to 2.3 million.
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