Enap Evaluates US$300mn E&P Investment

Chile's state oil company Enap is considering investing US$300mn in an exploration and production project in eastern Venezuela and is expected to make its final decision during the first quarter of 2006, local newspaper El Mercurio reported.

Venezuela's socialist President Hugo Chávez invited Enap, through the country's state oil company PDVSA, to choose a block for E&P, the paper reported.

If Enap does decide to move forward with the project the company would need to modify its financial plan for the coming years. Excluding Venezuela, Enap has budgeted US$300mn for investments in 2006, including a US$52mn project to explore for natural gas in the Lago Mercedes basin of Tierra del Fuego in Chile's southern Region XII, the paper reported.

The Venezuelan project would mark the seventh foreign endeavor undertaken by Enap, which through its international subsidiary Sipetrol is currently producing hydrocarbons in roughly 10 fields and exploring 10 blocks in Argentina, Colombia, Ecuador, Egypt, Iran and Yemen, the paper reported.

Enap has drawn sharp criticism recently after buying Anglo-Dutch oil firm Shell's Peruvian fuel retail business in 2004 and announcing the purchase of Shell's Ecuadorian downstream assets last week. Some local lawmakers deem these ventures to be risky in light of political instability in these countries and believe Enap is neglecting its domestic responsibilities in favor of international expansion.

The senate's mining and energy committee will call on Enap CEO Enrique Dávila to explain the company's motivation behind the acquisition of Ecuadorian assets in the first week of January.

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