Anglo Dutch Shell (NYSE: SC) has been reinterpreting studies carried out in the 1980s by state oil company PDVSA, and considers that the 10-14 trillion cubic feet of recoverable reserves in place could support a larger train, giving greater economies of scale that would make the project more competitive and put it in a stronger position to compete against potentially very large-scale projects in the Middle East, Duffield said.
However, even at its current size, the project is "very feasible from the economic point of view," Duffield said. The 4.7mt/y train would require some 700 million standard cubic feet a day (mscf/d) of gas. The project would also supply 300mscf/d to the domestic market, which would probably use it as feedstock for new projects in industries such as methanol, fertilizers and petrochemicals.
Shell owns a 30% stake in the project, PDVSA has 60% and Japan's Mitsubishi has 8%. The remaining 2% is set aside for Venezuelan companies. Shell aims to come to a complete joint venture agreement by year-end or early 2005 at the latest, at which point the partners would probably set up a specific purpose company to develop the project and proceed with the next stages, Duffield said.
The next stages include a front-end engineering study, environmental studies, financing planning and marketing agreements. "Shell is ready to make a commitment on fully competitive market terms to buy a substantial amount of production and place it in the North American market, in both existing terminals on the east coast and new terminals that we are involved in developing," Duffield said.
"We have a terminal that is being built at the moment in Altamira [Mexico], so that's a definite possibility, and we have a planning process going on for a terminal offshore Louisiana. But we have capacity at Cove Point and Elba Island [in the US] and we are ready to make that capacity available to this project," he added.
Moving forward, "I think we are targeting an investment decision by the end of 2006 at the latest," Duffield said, adding that first production of LNG would be late 2009. With developments in Mariscal Sucre, the Deltana platform, the Gulf of Paria and possible finds in the Gulf of Venezuela, the country has tremendous potential for LNG exports, Duffield said, adding that he considers Mariscal Sucre to be Venezuela's most mature LNG project, which once operating could showcase the country's capabilities and attract further investment from both Shell and third parties alike. "We see the potential, and we are ready to cooperate fully with other projects and other possibilities so that Venezuela maximizes the way it develops and grows its LNG business," Duffield said.
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