Venezuela's Energy Ministry Readies New Gas Tenders

Venezuela's mines and energy ministry is preparing a number of tenders to develop gas reserves estimated at up to 196 trillion cubic feet (tcf), deputy energy and mines minister and director of state oil company PDVSA, Luis Vierma, told delegates at this week's Latin American and Caribbean Gas Summit in Trinidad.

By July 15, the mines and energy ministry will contact companies to discuss the terms and conditions of seven offshore blocks in the Gulf of Venezuela.

The seven blocks are Róbalo, Merluza, Barracuda, Lisa, Sierra, La Vela and Falcón Noreste, although according to different government information they may be joined by an eighth recently defined block, Los Frailes.

Onshore, five non-associated natural gas blocks will be reoffered by the end of this year or the start of next year, Vierma said. They are Norte de Ambrosio (Zulia state), La Galera and El Pao (both in Cojedes state), and El Totumo and Memo (both in Aragua state).

Following those blocks, the next areas on PDVSA's timetable are Blanquilla, Carupano, Fachada Alantica, Ensenada Barcelona, Tuy-Cariaco and Cubagua.

"If everything goes smoothly, as it has been so far, the process of exploration will take from 2003, when we finished in the Deltana platform, to 2008. The total investment in this exploration campaign will reach US$100mn," Vierma said.

The developments are expected to lead to production of 2.5 million barrels of oil a day (b/d) and 6.8 billion cubic feet of gas a day (bcf/d), he said. Venezuela's proven reserves are 148tcf but could be much bigger after considering its largely unexplored offshore areas, Vierma said. "We have half a million square kilometers of offshore areas that need to be explored, and we believe that if there are opportunities to develop new fields in oil and gas, then those opportunities are right there [offshore]," he said.

Unlike oil, in order to successfully develop natural gas a secure market has to be in place first, Vierma said, and so in considering partnership proposals PDVSA would consider what access bidders have to a secure market, "Especially space in [liquefied natural gas] regasification plants, especially in our target [market], which is the east coast of the US."

Companies would moreover need to have excellent environmental credentials and to be "first class" in terms of exploration and production. "Cheap oil in the world is gone," Vierma said. "In our basins we are looking at very deep reserves; we need to drill to about 20,000 feet for our cretaceous reservoirs. This means that we need a lot of technology to make those investments successful."

"We are looking for new technologies, which are the key to the future. There we want to use the technologies available to drill intelligent wells that will allow us to increase productivity, and in that sense we are looking forward to production costs of less than US$1/mBTU," he said.

Partners would also have to fall in line with Venezuela's plans to encourage sustainable development in the areas in which it operates and its desire to boost local content in its projects, Vierma said.

CWC Associates Limited organized the conference.

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