PDVSA Delays Signing Mariscal Sucre JV Until Feb. 2004

Venezuela's state oil company PDVSA has delayed signing a joint venture deal with UK-Dutch company Shell and Japan's Mitsubishi to develop the US$2.7bn Mariscal Sucre liquefied natural gas (LNG) project until February 2004, PDVSA's project execution manager Gustavo Guilarte told BNamericas.

PDVSA had planned to sign the agreement in November. "Right now we are in discussions about the JV - what has delayed us has been the award of the license by the energy ministry," Guilarte said. "We haven't seen the speed [to award the license] we hoped within the ministry."

The partners still plan to award a construction contract for the liquefaction plant by late 2005 and start construction by early 2006, ready to start production in 2008, Guilarte said. However, before starting construction, the partners plan to complete basic engineering, an environmental impact study (EIS) and financing agreements by mid-2005.

The companies signed a preliminary development agreement (PDA) in December 2002, which would give PDVSA 60% ownership, Shell 30%, Mitsubishi 8% and other Venezuelan organizations 2%. However, PDVSA plans to sell 9% of its participation to Qatar Petroleum, which is still carrying out a due diligence study. "There is nothing signed yet," Guilarte said.

The project partners will form a special purpose company to operate Mariscal Sucre, and their equity participation will be proportional to their stakes in the project.

The project is designed to produce between 4.7 and 5 million metric tons of LNG annually, all of which would be exported to the US. The project is located 200km from Venezuela's other major offshore natural gas project, the Deltana project, in northwestern Venezuela off the Paria peninsula in Sucre state. The proposed location of the liquefaction plant is in the Gran Mariscal de Ayacucho Industrial Complex (CIGMA).

Gas reserves are estimated at 10 trillion cubic feet.

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