Russ Oil-Gas

24.09.2008 - [Neftegaz.RU] - Petroleos de Venezuela S.A. has announced a new agreement with Gazprom concerning the Russian monopoly’s first foreign project to produce liquefied natural gas. Gazprom is to invest approximately $850 million over course of seven years and receive income from the sale of 700,000 tons of liquefied natural gas, that is, about $420 million at current prices, per year. It will liquefy some of the gas produced as a result of its cooperation agreement with Venezuela to develop gas on the Latin American country's shelf Alexander Medvedev, Gazprom deputy chairman, and Rafael Ramirez, Venezuelan Energy and Oil Minister and president of PDVSA, held negotiations last Friday and signed a memorandum of understanding on the Blanquilla and Tortuga project in the presence of Venezuelan President Hugo Chavez. 'Exploration and production of natural gas on the shelf will be delivered to the domestic market and will also be liquefied for export,' Gazprom said in a statement, without saying where the liquefied natural gas (LNG) would be shipped. The Blanquilla and Tortuga project includes exploration and production of natural gas on the continental shelf, its sale on the domestic market and its liquefaction and export. It is the third phase of the Delta Caribe Oriental project, in which PDVSA has invested $19.6 billion and in which it owns 60 percent of each phase. The third phase will extend from 2009 to 2016. Total investment in it will come to $5.73 billion. Besides Gazprom, Eni of Italy (10%), Petronas of Malaysia (10%) and Energias de Portugal (5%) will have shares. Gazprom, which is the largest gas producer in the world and supplier of a quarter of Europe's gas, has said it will add some 90 million tonnes of the super-cooled LNG fuel to its production by 2030, making it a global player with a quarter of the market. The company now has no LNG production of its own, but will get the first volumes next year when it launches its Sakhalin-2 project together with Royal Dutch Shell (nyse: RDSA - news - people ) and Japanese firms. Venezuela has proven reserves of 4.1 trillion cu. m. of natural gas, the second largest reserve in the Western Hemisphere after the United States. Venezuela produces about 30 billion cu. m. of natural gas per year, mainly as petroleum associated gas. The country’s proven oil reserves total 11.2 billion tons (7% of world reserves). The U.S. is the largest importer of Venezuelan oil. Gazprom did not name the amount of financing needed for the project or projections of production or reserves. The company did say however that it will look at other exploration and development projects in Venezuela.