Venezuela signs joint venture deal for offshore natural gas fields

Mar 09, 2009 01:00 AM

Venezuela's oil company PdVSA announced the signing of a multi-billion-dollar joint venture with Portugal's Galp Energia, US Chevron, Argentina's Energia, Japan's Mitsubishi, Mitsui and Itochu to develop a $ 19.65 bn project in the offshore natural gas fields of Venezuela's Caribbean and Atlantic coast next to Trinidad and Tobago's maritime boundaries.
The $ 19.65 bn venture will develop an estimated 28.8 tcf of natural gas reserves in the offshore Deltana platform-Atlantic Sea, in the southern maritime boundary with Trinidad and Tobago and the northern Paria coast in the Caribbean Sea, also close to Trinidad and Tobago's northern offshore oil and gas fields.

The project calls for the development of offshore extraction and pumping facilities, as well as production installations and pipelines to take the gas to the Mariscal Sucre Complex (Sigma, complex to be developed next to the city of Guiria at the shores of the Gulf of Paria. The Sigma complex is to be built with two LNG trains, each with a projected annual yield of 4.7 mm tons of LNG.
It will be the most important LNG facility in South America, PdVSA said.

The infrastructure will be able for the receipt, treatment, liquefaction, storage and shipping of 700 mm cf of natural gas, which means a production of 4.7 mm tons of liquefied natural gas per year.
"The Sigma plants will be the most important gas industrial complex in Latin America. The initiative shows the 'trust' placed in Venezuela," Eulogio del Pino, PdVSA's E&P Vice President said, adding that it will "supply gas throughout the Caribbean, South America and premium markets in Europe and Southeast Asia".

The venture, in which PdVSA will have a majority stake, will design and build LGN plants at the Sigma Complex with the help of a Russia's-PdVSA consortium yet to be formed, a MoU to conform the Venezuelan-Russia joint venture (JV) was signed last December. The operation of the LNG trains will be done with the JV consortiums of each of the trains.
The first LNG train, with an annual capacity of 4.7 mm tons, will use gas from the Plataforma Deltana's block 2. Chevron has a 39 % stake in the block and PdVSA holds the balance. PdVSA will hold 60 % of the JV, Portugal's Galp will hold 15 %, Chevron 10 % and Japan's Mitsubishi-Mitsui a 5 % stake. Investment in the train will reach $ 6.4 bn.

The second train, also to have an annual capacity of 4.7 mm tons, will use gas from PdVSA's Mariscal Sucre Northern Paria fields, which PdVSA is now developing alone. PdVSA also will have a 60 % stake, Galp will have a 15 % stake, Argentina's state energy company Enarsa 10 %, Mitsubishi-Mitsui 5 % and Japan's Itochu 10 %. A total of $ 5.2 bn will be spent to develop the second train.
A third LNG train is to be build with the majority of PdVSA and the partnership of a Russian consortium of five Russian companies lead by Gazprom. The JV is to process the offshore gas of the Delta Caribe Oriental Project in the Caribbean sea north of Margarita Island and includes the Blanquilla and Tortuga fields. A memorandum of understanding for the exploration for gas in the two areas, La Blanquilla and La Tortuga, was signed last December. The investment expected is in the order of $ 5.7 mm.

A joint venture for the exploration and development of the fields and of the third train is yet to be formed with PdVSA which will hold a 60 % stake. Russia's companies will own 15 %, Italy's ENI will participate with 10 %; Malaysia's Petronas, will hold 10 %; and Portugal's EdP, will control 5 %, according to the MoU signed last December.
"We have all the companies' commitment to maintain the project, to make investments for the development of basic engineering, that we hope will be completed in 2009, for a total of $ 200 mm," said Energy Minister Rafael Ramirez. The plans targeted the gas to begin commercializing the LNG in 2012.

Venezuela has gas reserves that reach 180 tcf of gas and expectations of 166 tcf (50 % out of it is offshore gas). The country has 2.4 of the world reserves, 59 % of Central and South America and 29.3 % of America, PdVSA officials confirmed.
Venezuela is the world's fifth-leading oil exporter.

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