Russ Oil-Gas

Sep. 23, 2008 - Kommersant - The state company 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 will invest about $850 million in the course of seven years and receive the income from the sale of 700,000 tons of liquefied natural gas, that is, about $420 million at current prices, per year. 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. 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. 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.