VENEZUELA - Brazil Deals.

Presidents Lula and Chavez on Jan. 18, 2007, signed a protocol covering the planned pipeline. They signed protocols covering a heavy oil project in Venezuela's Orinoco Basin and the offshore Mariscal Sucre Gas Project, which will involve the state-owned Petrobras. The accords were signed in Rio de Janeiro after a meeting between the two presidents. They were participating in a broader meeting of member-states of the South American trade bloc Mercosur.

Brazil and Venezuela then agreed to move on to the "conceptual planning phase" of a first section of the natural gas pipeline which is planned to cross more than 5,000 km starting in Guiria, Venezuela, and ending in Recife in north-eastern Brazil, Petrobras CEO Sergio Gabrielli said in a press conference after the signing ceremony. Ramirez then said the proposed pipeline was the most important energy project in South America in 50 years. The pipeline is to have a capacity of 50 MCM/day, and is to use half of the gas which Petrobras and PDVSA plan to produce from the Mariscal Sucre fields off the coast of Venezuela.

Gabrielli said gas reserves at Mariscal Sucre were about 14 TCF. Brazil and Venezuela will try to complete the conceptual planning of the pipeline by December 2007, then move on to an engineering planning phase which could take another 1 1/2 years, according to Gabrielli. He would not say when the two states will make a firm commitment on how much they will invest in the massive pipeline project.

Work on the Mariscal Sucre gas fields had been delayed since 2006 because of an acute shortage of drilling rigs. In February 2007 PDVSA said it was hoping the project's rig requirement was to be met in the second half of the year. But until now there has been no new development in that regard.

Lula and Chavez signed a protocol to set up a JV to produce extra heavy oil from the Carabobo field in the Orinoco River basin, and another for a plant to treat the extra heavy oil to make it fit for refining. Ramirez said Carabobo had reserves of 9 bn barrels of oil. PDVSA and foreign oil firms, among them Petrobras, are currently trying to make a more precise estimate of the heavy oil reserves in the Orinoco basin. Gabrielli said PDVSA will have 60% in the Carabobo JV and Petrobras 40%, adding: "The stakes will be according to the principle of reciprocity".

In exchange, Petrobras will have a 60% stake in a planned 200,000 b/d refinery to be built near Recife in North-Eastern Brazil which is to partly refine crude oil from Carabobo. PDVSA will have the other 40%. The refinery is to be built by 2011. Its price tag, however, has gone up to over $10 bn, according to an APS source on Nov. 17, compared to $4 bn estimated in late 2006 and $2.5 bn estimated in early 2006. A last protocol of intention covers the joint exploration of five mature oilfields in Venezuela which still have 464m barrels of oil in reserves.

Trinidad-Venezuelan Gas Field Unitisation Deal - LNG Export Plan: Trinidad Prime Minister Patrick Manning and President Chavez on March 20, 2007 signed an agreement unitising a gas-rich area straddling the maritime border between the two countries. This covered the Loran field, as called by Caracas. The field is called Manatee on the side of Trinidad & Tobago (T&T), where operator Chevron has found about 10 TCF (283 BCM) of natural gas reserves. About 7.3 TCF of these are thought to be on the Venezuelan side of the waters.

Chevron, which operates an offshore block on the Venezuelan side of the border where it has found a major gas reserve (see gmt19VenzGeoNov5-07). The US major has said the most logical solution would be to send the Manatee gas through T&T's Atlantic LNG venture and put the Loran gas through Venezuela's planned LNG venture.

Chevron hopes the Venezuelan side would have an LNG plant consisting of at least two trains. The first train of the proposed Venezuelan plant would have a capacity of 4.7m t/y of LNG.

There have also been discussions about exporting Venezuelan gas via T&T's Atlantic LNG facility, which has become one of the world's biggest gas liquefaction centre and the main source of LNG to the US market.

Chavez and Manning said their agreement was the first of its kind in the Americas. Chavez said: "It reflects our will to co-operate, to become integrated, to unite". Manning said he welcomed the opportunity to renew his friendship with Chavez. The T&T prime minister had previously resisted Venezuela's PetroCaribe initiative to supply fuel under preferential terms to states in the Caribbean (see OMT), where Trinidad has long been a key supplier. But neither leader mentioned that issue and instead focused their remarks on plans for co-operation.

T&T and Venezuela agreed in 2003 to negotiate the carving up of offshore gas reserves to avoid conflicts over how much belonged to each side. A bi-national committee determined the Loran field, part of an area which Caracas called Deltana Platform, had about 10 TCF, some 7.3 TCF of which belonging to Venezuela.

In 2003, Caracas gave Chevron a licence to explore for gas in Deltana Block 2, which includes the Loran field. The committee also determined that a gas field called Dragon in Caribbean waters north of Venezuela was not linked to adjacent fields in T&T waters and therefore will not be subject to a unification process. Caracas then said it had agreed to reach an accord with T&T over how to develop these reserves.

BP T&T in August 2007 pledged to continue investing heavily in gas exploration in Trinidad, dismissing claims that the Caribbean nation's reserves were only to last another 12 years.

An audit conducted by consultants Ryder Scott found T&T's gas reserves had dropped over the last two years from 963 BCM to 850 BCM. But T&T Energy Minister Lenny Saith said geological data indicated the presence of another 34 TCF of unexplored natural gas beneath Trinidad and surrounding waters.