Petrobras drops plans for Venezuela's Mariscal Sucre gas field

Oct 31, 2007 01:00 AM

Petroleo Brasileiro, Brazil's state-controlled oil company, rejected plans to help develop Venezuela's Mariscal Sucre offshore natural-gas field, the source for a proposed $ 20 bn Amazon pipeline to Brazil.
Petroleos de Venezuela and Petrobras, as the company is known, studied plans to send half the field's output of 34 mm cm (1.31 bn cf) a day to Brazil. The line would have started Venezuelan President Hugo Chavez's proposed “Great Southern Pipeline”, a 5,000 km (3,108 mile) network to bring Venezuelan reserves, South America's largest, throughout the region.

Petrobras and PdVSA, as the Venezuelan state oil company is known, are negotiating more than $ 6 bn of joint refining and exploration projects. Talks have stalled as the relationship between the countries' presidents, Chavez and Brazil's Luiz Inacio Lula da Silva, swings between friendship and rivalry.
“We are out of the project,” Petrobras Chief Executive Officer Jose Sergio Gabrielli said. “We had interest, and we analyzed it, and we are not talking about Mariscal Sucre right now.”

Petrobras's decision to pull out of Mariscal Sucre is not the first. Royal Dutch Shell and Mitsubishi planned development in the field earlier this decade and Shell considered returning as recently as 2005. PdVSA said Qatar's state oil company was close to taking a 9 % stake in the project in 2003. ExxonMobil had a 29 % interest there until 2002.
On Oct. 26, PdVSA hired Neptune Marine Oil & Gas to drill 21 offshore wells for $ 785 mm. Gazprom, the Russian oil monopoly, applied for the rights to develop the field along with Plataforma Deltana and Delta Caribe Oriental.

PdVSA use
PdVSA said Oct. 26 it would develop the field for domestic use. In Venezuela, gas sales are made at below market prices, a factor that would reduce the field's profitability. PdVSA says the gas is to be exported from a $ 2.7 bn liquefied natural-gas plant. Chavez said Oct. 12 his country will send gas to Colombia, Ecuador, Bolivia, and Panama in the coming years.
The head of Uruguay's energy agency said his country was in talks to import liquefied gas from the Mariscal Sucre field for use in Uruguay and Argentina.

The decision to drop out of Mariscal Sucre is only one in a series of difficult negotiations Petrobras has had with PdVSA.
Contracts to build a $ 4.5 bn heavy-oil refinery near Recife, Brazil, in the country's Northeast, have yet to be signed almost a year after Lula and Chavez laid the cornerstone for the project. Another ribbon-cutting ceremony was held in Sept. 3 without the presence of Venezuelan or PdVSA officials.

Carabobo field
A contract for Petrobras and PdVSA to develop the Carabobo field in Venezuela's Orinoco River basin also remains unsigned. Petrobras is to own 60 % of the refinery and PdVSA the rest. In Carabobo, Venezuela would own 60 % and Petrobras 40 %. Chavez backed Bolivia's efforts to nationalize its oil industry, a move that forced Petrobras to sell its refining assets in the country.
“We are talkingwith PdVSA only on the refinery in Brazil and on Carabobo,” Gabrielli said. “Complex negotiations take time. We need urgency and patience.” Petrobras wants to sign the contracts for the refinery and Carabobo by December, he said.

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