July 23, 2008

Venezuela Wants Gazprom to Join Lng Project

MOSCOW. July 23 (Interfax) - Venezuela would like to see Gazprom (RTS: GAZP) take part in the Delta Caribe Oriental LNG project, which involves development of the Mariscal Sucre and Deltana Platform blocks and construction of an LNG plant in Venezuela.

Venezuelan officials expressed their interest at a meeting with Gazprom representatives in Moscow, the Russian gas giant said in a press release.

Gazprom and Venezuelan state oil and gas company Petroleos de Venezuela S.A. (PdVSA) signed an agreement July 22 on joint exploration of the Ayacucho 3 block in the Orinoco oil belt, under which Gazprom Latin America B.V. and PdVSA will complete the geological modeling, evaluation and calculation of reserves at the block, after which they will be certified by an international auditor.

They will also prepare a justification of investment concerning development of heavy oil reserves at the block.

They also discussed progress in the Rafael Urdaneta project and opportunities for cooperation in creating gas infrastructure in Venezuela, the statement says.

Venezuela's proven gas reserves stand at 4.3 trillion cubic meters, the largest in Latin America, and 11.2 billion tonnes of oil, 7% of global reserves. It produces about 30 billion cubic meters of gas a year. Gas accounts for 41% of Venezuela's energy production and consumption, oil for 38% and hydroelectric for 21%. Venezuela consumes all the gas produced domestically; it does not import or export any gas.

PdVSA has monopoly rights to produce natural gas in the country. Venezuela is taking part in development of the South American trans- continental pipeline system, which will link Venezuela, Brazil, Argentina, Uruguay, Paraguay and Bolivia into a single network.

Gazprom operations in Venezuela are governed by the memorandum of understanding signed with PdVSA in January 2005. That document covers Gazprom's participation in certifying reserves at the Ayacucho 3 block. PdVSA estimates that the block contains 5 billion tonnes of oil reserves.

Gazprom has also signed contracts with Venezuela on development of a general scheme for developing the nation's gas sector and on performing work in the visualization stage of the first phase of the South American gas pipeline.

In September 2005 Gazprom won the tender to develop natural gas fields as part of the Rafael Urdaneta project (Urumaco 1 and Urumaco 2 blocks). In May 2007 Gazprom completed the first stage of geological exploration work and approved exploration drilling.

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