Statoil Set to Finish Venezuela Gas Drilling By End-October

MARACAIBO, Venezuela Jun 14, 2007 (Dow Jones Newswires)

Statoil ASA (STO) will complete a three-well program in Venezuela's Deltana Platform by the end of October, underscoring the company's continued interest in Venezuela despite a recent overhaul of oil contracts.

"We're finishing the second of a three-well program," said Gilberto Cardenas, Statoil's business development director for Venezuela.

The second well, Ballena-1X, was drilled in the deepest water of any Venezuelan well to date and will be completed by the end of June. Cardenas gave no details on drilling results at the second well.

Statoil continues to invest in the Deltana project despite contract uncertainty. President Hugo Chavez has floated the ideas of taking majority stakes in natural gas operations and altering marketing contracts to direct supplies to the local market, where the oil ministry sets prices.

In comments to Dow Jones Newswires at an oil conference, Cardenas said Statoil's contract terms specify 90% of production will be exported, with 10% set aside for Venezuela. Venezuela currently suffers from a domestic gas shortage and even plans to import the fuel from Colombia despite large domestic reserves.

The contract also gives Petroleos de Venezuela SA, or PdVSA, an option to buy a 35% minority stake in the project if commercial reserves are found. PdVSA is taking 60% stakes in all the country's oil projects in ongoing negotiations with outside firms. Many analysts expect natural gas deals to go through a similar overhaul.

Statoil has confirmed natural gas at the first well.

PdVSA estimates that Plataforma Deltana contains some 40 trillion cubic feet of natural gas reserves. France's Total SA (TOT) has joined Statoil at the Deltana project. The two majors are also partners at the Sincor extra-heavy crude project, currently undergoing forced contract changes that have put the state oil company in charge of operations.

The Deltana is a continental shelf extension of the Orinoco River delta along the eastern coast of the country. Statoil won a license in 2003 to operate block four, and it has hired a rig from Transocean (RIG) to carry out the drilling.

Copyright (c) 2007 Dow Jones & Company, Inc.

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