Venezuela's PdVSA signs gas supply contract with Eni, Repsol
By KEJAL VYAS
Venezuelan state energy giant Petroleos de Venezuela signed a supply contract with Italy's Eni SpA and Spain's Repsol YPF that will allow for development of the South American country's massive offshore Perla gas field.
The project, which is seen producing as early as the end of next year, is slated to receive some $4.5 billion in investment and is expected to help Venezuela overcome power shortages that have plagued the country in recent years.
Though boasting one of the world's largest gas reserves at around 195 trillion cubic feet, insufficient domestic supply has resulted in Venezuela's having to import more than 200 million cubic feet of gas daily from Colombia to meet its power needs.
Project development has been slow, which some critics attribute to red tape and regulatory uncertainty emanating from President Hugo Chavez's government.
The Perla fields hold 16.3 trillion cubic feet of gas, equivalent to approximately 3 billion barrels of oil.
Around 300 million cubic feet of gas per day is expected to be produced at the site by 2013, Venezuelan Oil Minister Rafael Ramirez said at a signing ceremony with the heads of Eni and Repsol.
In subsequent phases of the project, production is seen rising fourfold to 1.2 billion cubic feet per day, which will be maintained until the end of the contract in 2036.
Officials said that supplies from the field should help meet domestic demand, after which the partners will evaluate opportunities to export gas.
"We'll have a better vision of that in the coming year," Ramirez told reporters.
The European companies currently have split ownership of Perla, which is located in the Cardon IV bloc and is considered Latin America's largest natural-gas find.
However, PdVSA, as the Venezuelan company is known, has a 35% back-in right to be exercised in the development phase, which will leave Eni and Repsol each with a 32.5% stake.
Eni chief executive Paolo Scaroni said on the sidelines of Friday's signing ceremony that the company's total investment in Perla is around $3 billion, though the project "is still in early days."
In a Spanish regulatory filing Friday, Repsol said it plans to invest $1.5 billion in the first phase.
Dow Jones Newswires
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