Malaysian oil company Petronas is exiting one of the biggest petroleum projects in Venezuela's Orinoco belt after disagreements with state-run PDVSA, sources close to the venture told Reuters.

The flagship project, called Petrocarabobo, has planned investments of about $20 billion over 25 years and calls for building a 200,000 barrel per day upgrader to convert heavy crude into light crude oil.

When the venture was formed in 2010, Venezuela touted it as a sign that oil companies were willing to put up with demanding fiscal conditions in exchange for access to the world's largest oil reserves.

State-owned Petroleos de Venezuela (PDVSA) has 60 percent of the project. Petronas belongs to a consortium that holds 40 percent. Its other partners are Spain's Repsol, India's ONGC (ONGC.NS) and two small Indian firms. Petronas holds an 11 percent stake.

"We exited already," said a top executive from Petronas, who was not authorized to speak publicly about the matter. He added that the company will not run any other projects in the OPEC-member country.

It was not immediately clear if Venezuela's petroleum ministry had been told of the decision.

Venezuela's Petroleum Minister Rafael Ramirez declined to address the issue on Monday and urged reporters in Caracas to consult Petronas.

A second source in the consortium said the company had not received approval and that the other companies in the consortium would likely share the Petronas stake.

Under Venezuelan law, the government has to approve the departure and the new ownership structure of the venture.

State-owned Petronas entered Venezuela's oil sector in 2010, three years after an expanded nationalization in the oil industry under socialist leader Hugo Chavez, who died in March. The Petrocarabobo project started production in late 2012 and has a capacity to produce 400,000 barrels per day (bpd).

A third source close to the project told Reuters that frequent changes in the fiscal framework, disagreements with the government of Chavez's successor - Nicolas Maduro - about the business terms, and long delays led to the decision to withdraw.

Petronas planned to feed a new $19 billion refinery and petrochemical complex in southern Malaysia with Venezuelan crudes produced at its joint venture.

The consortium paid $1.05 billion to the Venezuelan government in May 2010 to become a partner in the project and it has to deliver an extra payment of $1 billion to finance PDVSA's stake, according to the terms of the deal.

Petronas was also exploring several natural gas projects in Venezuela, after being invited by the government to become its partner in some delayed developments for exploring and producing gas offshore. But it never formalized its participation.

Venezuela is struggling with a slow, long-term decline in oil and natural gas production and a recent refining crisis that is affecting its balance of payments.

The move by Petronas could raise more questions about Venezuela's ambitious plans to boost output that has been stagnant for years and the ability of the government to turn the promise of the Orinoco Belt into a reality.