Bidding Starts for Venezuela’s Natural Gas Licenses
Caracas, Venezuela, August 10, 2006—Venezuelan Energy Minister, Rafael Ramirez, Tuesday invited private companies to bid for licences to explore and produce off-shore natural gas as part of Project Delta-Caribe. Ramirez also announced that Venezuela is discovering 45% more gas than expected in some of its fields.
Exploration licences will be granted for four geographical areas or “blocs” located in the east of the country. Three of these will be 320 km north of the Margarita coast near the island La Blanquilla and one at Punta Pescador East, 500 km east of the capital Caracas.
PDVSA is expected to invest $172 million by 2010 while each licence entails an investment of $500 million.
Presenting the plan Ramírez said that the geological characteristics of the two areas suggest there is the potential to discover “prolific” reserves of gaseous hydrocarbons. It is estimated there could be a total of 11 trillion cubic feet of gas.
PDVSA will have a stake in each of the blocs. It will control a 70% share in Bloc “A” of La Blanquilla region and 35% in the other three blocs. Ramírez outlined his view of the partnerships saying, “We are introducing more competition, more participation, more technology and possibilities of expansion. This is an extraordinary gas project where, in line with our Constitution, the private sector plays its role and the State performs its functions of direction and control, and is conducive to the strengthening of our national industry.”
36 companies have been invited to participate including Chevron, Royal Dutch Shell, Repsol and China’s Sinochem. The licences are expected to be awarded at the end of October this year and production of natural gas is expected to begin by 2012.
PDVSA has recently signed similar agreements with foreign and domestic oil corporations for the exploration and production of oil in the petroleum rich west of Venezuela.
Project Jose 250
PDVSA is also investing 800 million dollars in the José 250 project to construct three gas processing plants that will be able to handle a billion cubic feet of gas per day. These plants will also be built in the east of Venezuela in San Joaquín, Jusepín and Pirital.
The first plant will be for extraction of the gas from the wells and will be finished in 2008. The other two plants will not be finished until 2013 and their purpose will be to condition the gas for its practical uses.
PDVSA says that the finished gas will be to satisfy the domestic demand and to aid in the development of the iron & steel, petrochemical, and electricity industries. Currently there is a domestic gas deficit of 1.1 billion cubic feet per day in Venezuela, which Venezuela hopes to eliminate by 2008.
PDVSA also says 10 percent of the investment will be invested in the development of the communities situated around the new plants. This will include the tomato industry, which is the traditional activity of the area.
45% More Gas Discovered than Expected
On Tuesday, Venezuela’s Minister Ramirez announced that it had discovered 45% more gas than expected in Block 2 of the Deltana Gas Platform, off of Venezuela’s eastern coast. Currently this block is being explored by ChevronTexaco and ConocoPhillips.
Venezuela has an estimated 150 trillion cubic feet (tcf) of gas reserves, which the government says will soon be as high as 196 tcf, once more exploration is conducted.
Block 2 of the Deltana Platform turned out to be 5.6 tcf, instead of the initially estimated 3.1 tcf.
Also, in another block, on land, known as Yucal Placer and which is being explored by France’s Total and Spain’s Repsol YPF, the companies discovered 1.9 tcf, instead of the expected 0.9 tcf.