Repsol's Venezuela Gas Find May Be Good News for Other Cos

Cardon IV Block
(Click to Enlarge)

BOGOTA (Dow Jones Newswires), Sept. 15, 2009

A big discovery of natural gas by Spain's Repsol YPF S.A. in western Venezuela may lead firms such as Chevron Corp. and Gazprom OAO, which unsuccessfully searched nearby areas, to take another gander.

Repsol, in an exploration partnership with Italy's Eni SPA, announced Friday it found reserves at the offshore Cardon IV block in the Gulf of Venezuela that could hold between 7 trillion and 8 trillion cubic feet in recoverable reserves. If confirmed, it could be the biggest natural gas discovery in Venezuela's history.

A find of natural gas in one block certainly isn't a guarantee that there is gas in nearby blocks, but analysts say it's reasonable to assume that there could be a degree of spillover.

Russia's Gazprom and San Ramon, Calif.-based Chevron both explored blocks over the past couple years that are very close to where Repsol made its discovery. All of the blocks are part of the Rafael Urdaneta project, which kicked off in 2005 off the northern Falcon state's coast.

Gazprom looked first, in the Urumaco I and Urumaco II blocks, while Chevron explored the Cardon III block, just next door to where Repsol made its find.

Both firms apparently came up empty, as no discovery announcements were made. Chevron said Tuesday that current evaluation of the block is independent of the Repsol announcement.

"After completing the well Tuna 1X on Cardon III earlier this year Chevron has continued evaluating the remaining prospectivity of the block," the company said in an emailed statement to Dow Jones Newswires. "It is too early to comment on further exploration plans."

Gazprom officials were not immediately available for comment.

"The (Repsol) find is certainly positive ... for any companies involved in exploratory work in any of the offshore gas blocks over the last several years," said Patrick Esteruelas, an analyst with New York-based Eurasia Group, a political-risk consulting firm.

In addition to the Urdaneta project, which has a total of 29 blocks and an estimated 26 trillion cubic feet of gas (which may be revised up after the Repsol find), Venezuela has also presented an even larger Plataforma Deltana gas exploration project off the eastern coast. It has an estimated 38 trillion cubic feet of gas.

Smaller offshore gas projects have also been presented, such as Blanquilla Est and Tortuga. Firms such as Eni, Gazprom and Malaysia's Petronas have shown interest.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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