Venezuela to begin natural gas production

Mar 21, 2002 01:00 AM

Venezuela's Chamber of Petroleum hosted a seminar for national and international companies to discuss plans to establish the country as one of the world's major natural gas exporters. The country possesses significant offshore deposits of natural gas, which are located in Venezuelan territorial waters near Trinidad and Tobago. Surveys have identified three suitable sites in the area: Norte de Paria, Golfo de Paria and the Plataforma Deltana.
Although the full extent of the deposit has not yet been established, preliminary estimates suggest it will meet the country's gas needs for at least the next 30 years. The authorities plan to use around 30 % of gas production to supply the national market. The remaining 70 % will be exported to the Gulf of Mexico, the East Coast of the United States and possibly to Western Europe.

The government estimates that it will require a total investment of around $ 100 bn to establish and maintain production throughout the field's projected 30- to 40-year lifetime. The authorities are therefore looking to foreign investors and natural gas companies to create partnerships with Venezuelan companies.
Among the international companies attending the meeting were Shell, ExxonMobil and the BG Group, formerly British Gas. In early March, Shell, ExxonMobil and the Mitsubishi Corporation presented a joint proposal to the Venezuelan government expressing their interest in participating in the Norte de Paria project. The BG Group has also submitted a gas development proposal worth $ 2 bn to the Venezuelan authorities and is expecting an official decision in the next few months.

The BG Group's head of commercial negotiations, David Bishopp, told his company was very enthusiastic about the prospects for Venezuelan gas. He said the company's offshore projects in nearby Trinidadian territorial waters had performed well and the BG Group was keen to extend its operations in the area.
Bishopp said the bidding process was proceeding smoothly and he expressed his confidence that the offshore projects would go ahead. "They've been talking about a liquid gas project at Norte de Paria for 15 years now, but I see a difference now in the government. I think this is it; I think everything is in place to make it happen," he said.

Venezuela's state oil producer PdVSA first discovered the country's offshore natural gas deposits in the late 1970s, but the company decided at the time not to take any further action and to focus on its existing oil business. Luis Verma of the mining and energy ministry's planning and policy department said the current government was determined to press ahead with the offshore projects.
He said the projects could increase Venezuela's export revenue significantly, providing a counterbalance to the country's current dependency on petroleum. Verma confirmed at the seminar that exploratory drilling had already begun at Norte de Paria. "Today we can say with some satisfaction that these projects are no longer possibilities, they are realities," he said.

The Chamber of Petroleum convened the meeting primarily to discuss the potential benefits of the offshore project to national companies and to the wider Venezuelan economy. The government wants the majority of material used in extraction, transportation and liquefaction to be made in Venezuela.
Experts believe national companies have the technical knowledge and production capacity to supply the gas industry with pipeline, service boats and even the rigs themselves. Contracts of this size would provide a significant stimulus to Venezuela's currently sluggish manufacturing and shipbuilding industries.
"If this is not the last chance, then it is certainly one of the most important possibilities we have seen to strengthen our national industries," Verma said. The natural gas projects will also have significant benefits for the western regions of Venezuela, which are currently underdeveloped. The gas will be piped from offshore platforms to processing plants in the region, and the authorities believe industrial complexes will spring up around the plants.

Workers and their families will also require health and education services as well as better roads and amenities, which will stimulate the local economy. The Venezuelan authorities are also keen to follow the example of Norway, which introduced a law in the early years of its gas industry obliging producers to invest heavily in research and development. Verma said he hoped Venezuelan gas producers would soon learn from their foreign partners and begin to adapt foreign technology to local needs and to innovate. "We don't just want to export gas, in the long term we also want to export technology and expertise," Verma said.
The mining and energy official said he was confident Venezuelan companies would meet the challenge of establishing a new and complex industry in the country. "In PdVSA, we have created a world-class petroleum producer," Verma said. "I see no reason why we cannot now create world-class natural gas producers."

Source: United Press International
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