PDVSA to Receive Bids on 6 Gulf Blocks July 27th

Venezuela's state oil firm PDVSA will receive bids from companies for natural gas exploration and production contracts on six offshore blocks in the Gulf of Venezuela on July 27, energy and oil minister and PDVSA president Rafael Ramírez announced.

PDVSA will announce the winners on August 10 and will sign contracts September 10, Ramírez told a meeting of potential investors, local authorities and media representatives in Falcón state on Monday.

The first stage of the Rafael Urdaneta project involves the granting of six 25-year licenses - five in Zulia state and one in Falcón - out of a total 29 blocks to be tendered in four stages.

The second stage will be for four blocks, the third for 10 blocks and the fourth for nine blocks, but dates have not yet been set for these tenders, Ramírez said.

The 29 blocks combined contain an estimated 26 trillion cubic feet of unassociated natural gas.

PDVSA will have the right to take a 35% stake in the contracts if and when commerciality is declared, Ramírez said.

Companies that receive licenses will have to comply with a minimum exploratory program that includes seismic studies and the perforation of a well in a maximum period of two years.

If gas is discovered, the companies are obliged to meet domestic demand before exporting the gas, but if gas production exceeds local demand the companies could obtain an export license from the energy and oil ministry, Ramírez said.

Venezuela's gas demand is expected to triple in the next 20 years due mainly to higher demand for petrochemicals and crude recovery projects, Venezuela's OPEC representative Iván Orellana told investors at the meeting.

The contracts also contain a provision for crude discoveries on the blocks, in which case the companies would negotiate a new association agreement with PDVSA, Ramírez said.

Thirty-seven companies have been invited to participate in the first stage.

Last year PDVSA said that only 21 companies had made the shortlist. However, the number of interested companies this year swelled to about 50, which was whittled down to the current 37 contenders.

The companies invited to take part in the first stage are: Amerada Hess, Anadarko, BHP Billiton, BP, BG, ChevronTexaco, CNPC, ConocoPhillps, El Paso, Eni, ExxonMobil, Gazprom, Inelectra, Lukoil, Marubeni, Mitsubishi, Mitsui, Nimir, Occidental, ONGC, Perenco, Petrobras, Petrocanada, Petropars, Pluspetrol, Repsol YPF, Samsung, Shell, Sonatrach, Statoil, Suelopetrol, Tecnoconsult, Tecpetrol, Teikoku, Total, Vinccler Oil and West Falcon Samson.

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