PDVSA and its partners Shell and Mitsubishi are currently carrying out a feasibility study that should be completed by November, he added. The companies signed a preliminary development agreement (PDA) in December 2002, which would give PDVSA 60% ownership, Shell 30%, Mitsubishi 8% and other Venezuelan organizations 2%. However, PDVSA plans to sell 9% of its participation to Qatar Petroleum, which is carrying out a due diligence study, Aboub said.
"Qatar is a convenient strategic partner for Venezuela because it has a lot of experience with LNG and both countries are close in their hydrocarbon policies," Aboub said. The project partners will form a special purpose company to operate Mariscal Sucre, and their equity participation will be proportional to their stakes in the project, Aboub said.
The partners plan to award a construction contract for the liquefaction plant by late 2005 and start construction by early 2006, ready to start production in 2008, Aboub said. However, before starting construction, the partners plan to complete basic engineering, an environmental impact study and financing agreements by mid-2005, he said.
PDVSA is "open to whatever sources of financing are available," Aboub said, adding local and international banks could participate. The project is designed to produce between 4.7 and 5 million metric tons of LNG annually, all of which would be exported to the US, he said. "We still don't have off-taker agreements, but we plan to export all of the production to the US," Aboub said, adding that PDVSA plans to sign off taker agreements by 2005.
Despite other proposed LNG projects in Mexico and Trinidad, PDVSA predicts there should be enough demand in the US market to absorb all the gas produced at Mariscal Sucre, Aboub said. The problem is "if there is enough re-gasification capacity or not," Aboub said, adding, "Today's re-gasification capacity would not be able to handle gas from all the possible producers." However, new re-gasification plants are being built in the US and that PDVSA is confident it could find other buyers in Mexico or Europe if needed, Aboub said. "We will export the gas to wherever we can get the best price," he added. PDVSA has decided to use Shell's gas liquefaction technology in the project, "which was chosen from many other technologies," Aboub said.
Previously known as Cristobal Colon, the project has been shelved several times since it was announced over ten years ago. However, "there has been evolution in the regulatory framework, now the legal system is more solid and there is a lot of interest in the US market that makes the project more feasible," Aboub said, adding higher demand and prices in the US are encouraging. The project is located 200km from Venezuela's other major offshore natural gas project, the Deltana project, in northwestern Venezuela off the Paria peninsula in Sucre state and the proposed location of the liquefaction plant is in the Gran Mariscal de Ayacucho Industrial Complex (CIGMA). Gas reserves are estimated at 10 trillion cubic feet, "but it could be more than that," Aboub said.
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