As a result of this agreement, Repsol YPF and PDVSA will form two production joint ventures in Venezuelan basins that are considered to have a high potential for oil. The first joint venture will operate in Venezuela at Barúa-Motatán, as well as in other possible areas.
At the same time, a joint venture will be formed between the two oil companies to operate the Junín 7 and or other blocks in the Orinoco oil belt in the southeast of Venezuela and which is considered to be one of the principle reserves of heavy and extra heavy crude oil in the world.
Furthermore, this regional Memorandum of Understanding contemplates the association of Repsol YPF and PDVSA, where the Spanish company will make a portion of its crude oil originating from the Argentine State concessions available for Petróleos de Venezuela. The percentage of the crude oil that will be made available to PDVSA will not surpass 10% of the production of the said concessions. This agreement will not affect the ownership of the concessions, which will remain Repsol YPF's.
At the same time, Repsol YPF could make the commitment to sell crude oil and derivative products to PDVSA to meet its supply needs in the Argentine market.
This Memorandum Of Understanding for Repsol YPF is an important step forward in its growth strategy, which contemplates a strengthening of its relations with national oil companies in countries where it operate. In the case of Venezuela, this agreement will allow Repsol YPF to consolidate its alliance with the state oil company, PDVSA, and which is the first agreement of its kind in that country.
Following the signing of the Memorandum Of Understanding, Repsol YPF chairman and chief executive officer Antonio Brufau said "this is the result of the good relationship that exists between the two companies," and added that "this confirms the strategic interest that Repsol YPF has in this region where it is the leading publicly traded oil company."
For his part, Rafael Ramirez, the chairman of Petroleos de Venezuela expressed his satisfaction with the Memorandum Of Understanding "that demonstrates the high level of understanding achieved with Repsol YPF and which will facilitate the development of PDVSA's activities in Argentina."
Hydrocarbon Production in Argentina
In 2004, the total net production of Repsol YPF in Argentina was 276.2 million barrels of oil equivalent, with proved net reserves of oil and gas estimated at the end of the year to be 2,364 million beop, equivalent to 8.6 years of production, based on the rate of production for 2004.
At the end of 2004, Repsol YPF had in Argentina mining rights to 113 blocks: 27 exploration blocks, with a total net area of 62,981 km2, and 86 exploitation blocks with a total net area of 24,834 km2, in the Neuquina, San Jorge, Austral, Cuyana and northwest basins.
Hydrocarbon Production In Venezuela
Repsol YPF is the leading publicly traded company in hydrocarbon production in Venezuela and the leader in gas production. Net production was 15.7 million barrels of oil and liquids separated from natural gas and 110.8 BCF of gas, with a total equivalent of 35.5 million BEOP (96,888 BEPD), coming primarily from the Mene Grande, Quiriquire, Quiamare-La Ceiba, and Guarico Occidental blocks, which are all operated by Repsol YPF. The proved net reserves for liquids and natural gas at the end of the year were estimated at 261.6 millions BEOP.
As of December 31, 2004, Repsol YPF had in Venezuela mining rights to 7 blocks: one exploration block, with a total net area of 1,970 km2 and 6 exploitation blocks, with a total net area of 5,902 km2. Venezuela is the fifth producer of oil in the world and the number one provider to the market in the United States.
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