TotalFinaElf Vying for Increased Share of Venezuelan Gas Project

TotalFinaElf is vying to increase its share of its stake in the Delta Platform offshore natural gas project. "We have notified the Venezuelan government several times of our interest," Jean-Michel Gires, the president of TotalFinaElf Venezuela, said in a statement.

The Delta Platform project, which is close to the border with Trinidad, consists of a block of 27,000 square kilometers with estimated proven gas reserves of 20 trillion to 30 trillion cubic feet. The initial exploratory phase of the Delta Platform project will cost about $ 375 million for the next two and a half years. But total investment including a liquefied natural gas plant at the Paria Peninsula could top $7 billion over the next six years. "We are interested in both projects, from exploration and production of natural gas to exports of LNG," Gires said.

There are five exploratory blocks up for licensing. BP and BG Group operate two blocks on the Trinidadian side and are expected to receive the rights to operate on the Venezuelan side. That would leave two blocks for TotalFinaElf, after licenses for the North Paria Mariscal Sucre liquefied natural gas project were awarded last week to a consortium that includes Shell and Mitsubishi. But even if the government grants TotalFinaElf the right to operate one of the blocks, it still needs more data. "We're reading all these estimates but that needs to be verified," Gires said. "But if these estimations prove to be right, then the project should not be difficult to start and operate."

The company already has a 69.5% share in the Yukal Placer natural gas field, where daily production of 300 million cubic feet is expected for the end of next year. It's expecting to invest $420 million in the project over the next two to three years. This year's investment should reach around $120 million, Gires said.

TotalFinaElf is facing competition from other majors interested in the gas potential of Venezuela. Statoil has said it could invest up to $3 billion in Venezuela's natural-gas sector if it gets the chance to develop most of the exploratory blocks that are up for licensing. Also, ExxonMobil has shown interest in the project.

Although none of the big energy companies have excluded working with partners other than PDVSA, clearly all of them want fewer companies involved. "Five operators on one block isn't logical. Operating costs will go up as you need five different organizations and each has their own way of working," Gires said. The best option probably would be a consortium similar to those used for four extra-heavy crude oil joint ventures in the Orinoco belt, Gires said. TotalFinaElf leads one of the four ventures, with a 48% share in the $4.2 billion Sincor project. Statoil has a 37% stake while PDVSA has the remaining 15% in the venture. The project was finished on time, remained within budget and is now exporting synthetic crude oil right on schedule. "Why not repeat this for the Delta Platform gas project?" Gires said.