Mariscal Sucre LNG Partners Ratify Framework Agreement

The Ministry of Energy and Mines of the Bolivarian Republic of Venezuela, PDVSA, Shell Gas & Power (Shell) and Mitsubishi Corporation announced the signing of a Framework Agreement setting the scope for the development of the North of Paria gas fields through the Mariscal Sucre liquefied natural gas (LNG) project.

The agreement, which was signed by the Minister of Energy and Mines Alvaro Silva Calderon; the acting President of PDVSA Jorge Kamkoff; the CEO of Shell Gas & Power Linda Cook; and the Director of Mitsubishi Corporation, James Brumm, marks the entrance of Venezuela as a very strong player in the world of natural gas exporting countries. It also plants the seed for the development of a new industrial area in the Sucre State, located in the eastern part of the country.

The project centers on the development of 10 tcf of gas resources in the Norte de Paria fields for both export and domestic use and includes the construction of an LNG terminal with an estimated capacity of 4.7 million tons per annum and the supply of up to 300 million cubic feet per day of gas to the local market. In addition, it allows for the exploration for new reserves around the existing fields.

The development of offshore natural gas reserves has a high priority in the Venezuelan energy policy. The implementation of the Mariscal Sucre project will have positive short and long-term impacts in the country, through the creation of employment and the participation of local suppliers of goods and services.

The next step will be the conclusion of the Project Development Agreement -- expected within the next few months -- to be followed by a Joint Venture Agreement (JVA) during the course of 2003. Prior to the signing of the JVA, engineering and other studies will be carried out and agreements and assurances will be agreed in order to reconfirm the viability of the project. This will be followed by the major contracts bidding and award phase leading into the construction and operation phases. The start up of the project is expected in 2007, requiring total investments of between $2.5 and $3 billion.

Linda Cook said: "Shell, together with its partners, is committed to making the Mariscal Sucre LNG project a success. Shell is a world leader in LNG and will bring its commercial and technical expertise and global reach to the project. This complements our strategy for LNG growth and offers an outstanding opportunity to contribute to the growth and prosperity of both Sucre State and Venezuela."

James Brumm, representative of Mitsubishi Corporation, said: "We very much look forward to the new job opportunities this investment will create and the stimulating effect it will have on Venezuela's economy. This project covers various areas of gas development ranging from exploration and production to domestic supply, liquefaction and export. It will also encourage the development of an industrial complex around the project site, which will bring further benefits to Venezuela's industry."