September 26, 2008
Five Russian Oil, Gas Companies to Join Russian-Venezuelan Consortium – Shmatko
ORENBURG. Sept 26 (Interfax) - The Russian and Venezuelan energy ministries signed a memorandum of understanding in Orenburg on Friday that envisions the creation of a Russian-Venezuelan consortium.
"We signed a memorandum between the Russian Energy Ministry and the Venezuelan Energy and Oil Ministry stating that we plan to draw up a special intergovernmental agreement in the near future that would regulate our mutual relations in the oil and gas industries," Russian Energy Minister Sergei Shmatko told journalists on Friday.A draft version of the intergovernmental agreement will envision the creation of a joint Russian-Venezuelan consortium that will include Venezuela's national oil company PdVSA and five large Russian companies - Gazprom (RTS: GAZP), Rosneft (RTS: ROSN), TNK- BP (RTS: TNKO), Surgutneftegas (RTS: SNGS) and Lukoil (RTS: LKOH), he said.
"We have set a rather dynamic deadline for drawing up the draft of this intergovernmental agreement. The draft version should be prepared by the end of October," Shmatko said. The Russian- Venezuelan intergovernmental commission is to meet before then, after which the draft version of the agreement will be submitted to the governments of both countries, he said.
Shmatko said the consortium would work in several Latin American countries, including Cuba and Bolivia, and could further expand its geography down the line.
The consortium's activities will be very multilateral and will include exploration as well as oil production in Venezuela, he said. The consortium will also resolve "issues related to the refining of oil and the subsequent commercialization and sale of the petroleum products received," he said.
Asked how the two countries' stakes in the consortium would be distributed, Shmatko said a Russian consortium would be created initially, which will then set up a Russian-Venezuelan consortium with PdVSA. As it stands now, the shares of the Russian companies in the Russian consortium will be equal, although no final decision on this issue has been made yet, he said.
"I think the companies will take part with equal shares, but they need to reach an agreement amongst themselves and on what terms the [Russian] consortium will be created with PdVSA - Venezuela doesn't have tight national restrictions. I don't think it's likely that we'll have a controlling stock interest," he said.
"PdVSA will have control," he said.
"The creation of such a consortium is, of course, a very serious bid to form a large player," he said.
Asked when the creation of the consortium would be completed, he said, "I think that the founding issues could formally become law later - by spring next year," he said. Commenting on Russia's investment in Venezuela as part of the consortium, Shmatko said it would amount to "tens of billions of dollars."
Gazprom CEO Alexei Miller said documents on the creation of national oil consortium are already being drawn up.
In comments on how the stakes would be distributed in the consortium, Miller said, "Apparently, Gazprom will head the national oil consortium from the Russian side. We are prepared for this because the company has been working in Venezuela for several years and already has positive experience. I can say that Gazprom has drawn up for Venezuela a general plan for the development of its gas industry, therefore we are working in this country on a scientific basis."
When asked if Gazprom would gain control over the consortium, Miller said, "No, Gazprom will be the operator."
As for investment, Miller said "hundreds of millions and billions of dollars" would be invested in the project. "A final decision, of course, needs to be made about which fields we will be working at," he said.
Miller said the Russian-Venezuelan consortium would be headquartered in Caracas.
The memorandum on mutual understanding with PdVSA will enable Gazprom to focus on new areas and expand cooperation in the oil and gas industry with both Venezuela and with other countries, including Bolivia, he said.
"At present, we and are Venezuelan colleagues are actively considering the possibility of working in third countries, in particular in Bolivia. The memorandum between Gazprom and PdVSA was signed today so that we could have permanent mechanisms on all projects that would allow us to carry out these projects, find new areas of cooperation and prioritize the projects of our joint work," he said.
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