Venezuela nets $ 61 mm from gas licenses

Venezuelan Energy Minister Rafael Ramirez announced the ministry awarded 3 licenses to explore blocks in the Rafael Urdaneta natural offshore gas project in the Gulf of Venezuela, netting $ 61 mm at the last auction, where the non-proven gas reserves in the areas are estimated to hold a combined 728 bn cm (25,710 cf) of gas.
Italian ENI and Spain's Repsol-YPF won exploration rights for the Cardon IV block for $ 34.3 mm. Brazil's Petrobras and Japan's Teikoku were awarded the Moruy II block for $ 19.5 mm and Venezuelan firm Vinccler Oil and Gas will get the license for the Castillete-Northeast block for $ 7.38 mm.

The Rafael Urdaneta offshore natural gas project involves 29 areas with 30,000 sq km (12,000 sq miles) in the Gulf of Venezuela. The winners of the bids can explore their blocks for 30 years, averaging an estimated investment of $ 61.2 mm or around $ 200 mm for the next four years, Ramirez said.
"We consider this process a success because it has opened the way for the domestic and international private capital," he said. On September 8, in the first phase, Russia's Gazprom and US group Chevron were awarded three concessions for some $ 46 mm.

The government plans to resume bidding on eastern blocks in 2006. Ramirez told that the operating 32 Venezuelan fields have trimmed oil production in an effort to pressure the government for better deals on the ongoing joint venture contract talks.
"We have discovered, much to our distaste, that companies are trying to pressure us by lowering production," said Ramirez. "Because of this we will take control of these fields very soon," added Ramirez.

PdVSA has said it will take over any fields whose operators fail to sign a letter of intent to change their contracts before the end of this year. Companies who do sign will be able to continue negotiating the terms of a joint venture with PdVSA in early 2006.
PdVSA is holding talks with operators of oil fields under operating contracts to migrate to joint venture operations were it is demanding a 60 % to 80 % stake in each field under a "joint venture” scheme.