PdVSA Inks $785M Deal to Drill 21 Offshore Natural Gas Wells

State oil company Petroleos de Venezuela SA, or PdVSA, has signed a deal to drill 21 natural gas wells off the coast of Venezuela as part of its Mariscal Sucre gas project.

The company signed a four-year contract with Neptune Marine Oil & Gas Ltd. (NEPT.NO), a drilling contractor based in Singapore, for $785 million, the company said in a statement Friday.

The Neptune Discoverer will begin work in Venezuelan waters starting in February.

The Mariscal Sucre project is the cornerstone of President Hugo Chavez's plan to generate natural gas for local consumption.

PdVSA and Brazil's Petroleo Brasileiro SA (PBR), or Petrobras, are expected to jointly develop the four Mariscal Sucre gas fields, but so far the companies have yet to settle the terms of investment or a production plan. The project is estimated to cost between $2.5 billion and $3 billion.

Petrobras and Venezuela have been known to differ on the destination of gas sales. Petrobras wants to sell most of it as liquefied natural gas, while PdVSA favors selling the bulk of production domestically, for much lower prices.

PdVSA has said it wants to begin production in late 2010.

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