Venezuela Signs Agreements with Eight Countries to Produce Liquefied Natural Gas

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Researched by Industrial Info Resources (Sugar Land, Texas)--PDVSA (Caracas), Venezuela's state-owned hydrocarbons company, signed agreements on September 19 with eight countries -- United States, Italy, Portugal, Malaysia, Qatar, Russia, Japan and Argentina -- within the framework of the Project Delta Caribe Oriental, which consists of the exploration of blocks in the Caribbean sea, as well as the production and transport of liquefied natural gas.

PDVSA will be the major shareholder in the $19.6 billion project, owning 60% of three new companies that have been formed to each construct one liquefaction and transport train at the facilities of the new Complejo Industrial Gran Mariscal de Ayacucho (CIGMA). CIGMA is a production, storage and distribution center that is a part of the Project Delta Caribe Oriental. The center will be built in Guiria in eastern Venezuela's Sucre Department and export products.

One of the new enterprises, Tren 1 Proyecto Delta Caribe Oriental, is owned by PDVSA (60%), GALP Energia (ELI:GALP) (Lisbon, Portugal) (15%), Chevron (NYSE:CVX) (San Ramon, California) (10%), Qatar Petroleum (Doha, Qatar) (10%), and the Japanese joint venture Mitsubishi-Mitsui (5%). The new company will build a pipeline to transport gas from the Plataforma Deltana natural gas reservoir to CIGMA and develop the first liquefaction train with an annual capacity of 4.7 million tons. The products will be exported to South America, Europe, Asia and the Caribbean. The facilities are expected to be operational around 2013 with an investment of $6.4 billion.

The second liquefaction train will be constructed by Tren 2 Proyecto Delta Caribe Oriental, owned by PDVSA (60%), ENARSA (Buenos Aires, Argentina) (10%), GALP Energia (15%), Mitsubishi-Mitsui (5%) and Itochu Corporation (OTC:ITOCY) (Minato, Tokyo) (10%). About $5.21 billion will be invested in the liquefaction train, which is expected to be operational by 2013 with a capacity of 4.7 million tons per year. The gas source will be the second phase of Project Mariscal Sucre in northeastern Venezuela.

Tren 3 Proyecto Delta Caribe Oriental, the third company, signed an agreement to explore and produce natural gas in the Tortugas and Blanquilla fields and to build a third liquefaction train at CIGMA. About $5.73 billion will be invested from 2009 to 2016, when the facilities will be completed. The majority owner is PDVSA, holding 60%. The other owners are: Energias de Portugal (Lisbon) (OTC:EDPFY) (5%), Gazprom (OTC:OGZPY) (Moscow, Russia) (15%), ENI S.p.A. (BIT:ENI) (Rome, Italy) (10%), and Petronas (Kuala Lumpur, Malaysia) (10%).

Venezuela has the eighth largest gas reservoir in the world, estimated at 147 billion cubic feet. Project Delta Caribe Oriental is part of Venezuela's strategy to raise its gas production to 11,500 million cubic feet per day by 2012.

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