VENEZUELA - Total Gas Operations.

Total which is an oil producer in Venezuela (see OMT), together with Repsol/YPF and their partners in the Yucal-Placer group of fields, which now is producing 100 MCF/day, have obtained the same pricing level as the Spanish major's for this gas from PDVSA. Repsol/YPF's share from this field's output is 15 MCF/day. But the field's production is to be increased gradually to reach 300 MCF/day by 2007.

Total, Repsol/YPF and their partners, as well as PDVSA, have kept the price of Yucal-Placer natural gas a secret. But Petroleum Argus in May 2004 reported that the price was 80% above the domestic market rate and that this was to be maintained for the first three years of Yucal-Placer's production, which began in late 2003 and increased to 100 MCF/day at the end of 2004.

Total leads a consortium for the Yucal-Placer venture, but Repsol/YPF has played a key role in the pricing negotiations with PDVSA in view of its strong position in Venezuela. Located in the central state of Guarico, 100 km south-east of Caracas, the field is ideally located close to the main gas market in the country.

The Yucal-Placer fields have been a flagship for Venezuela's effort to open up its gas sector to foreign investment, with the fields' proven reserves exceeding 3 TCF. Under a 35-year concession signed in June 2001, this group of several non-associated gas fields has been developed at top speed - in view of a mounting gas deficit in Venezuela. First gas was produced and supplied locally in late 2003.

Total holds 69.5% in this consortium and Repsol/YPF has 15%. Their partners are local private companies: Inepetrol (10.2%) and Otepi (5.3%).

ConocoPhillips Operations: In February ConocoPhillips and PDVSA signed an agreement ending a dispute over development of the offshore Corocoro oilfield in the Gulf of Paria. The $480m business plan for the field was approved at a meeting between ConocoPhillips CEO James Mulva, Venezuela's President Chavez and Energy and Petroleum Minister and PDVSA President Ramirez.

The meeting came weeks after Caracas rejected ConocoPhillips' plan to develop Corocoro, because it said the investment was US$200m less than an earlier agreement. The dispute paralysed drilling on the project, which was scheduled to begin in December last year.

As part of the accord, ConocoPhillips agreed to pay higher royalties of 16.7%, up from 1% on the Petrozuata Strategic Association (SA) in the extra-heavy Orinoco Tar Belt, and to revise its production schedule for Corocoro. ConocoPhillips will now reach oil production of 75,000 b/d at Corocoro in 2007, rather than in late 2006 as planned. Ramirez said: "The goal for 2009 is to take production to 120,000 b/d". Ramirez added that the field will be operated "in synergy" with the gas-rich, shallow-water Plataforma Deltana zone, where ConocoPhillips has a 40% stake in Block 2 operated by ChevronTexaco (see Gas Market Trends No. 18, and the Gran Mariscal de Ayacucho industrial complex (CIGMA).

The Corocoro field - discovered in 1999 by ConocoPhillips and declared open for commercial use in 2002 - is part of the Paria Oeste block, which lies between Venezuela and Trinidad & Tobago (T&T). Corocoro is a key part of the government's plan to raise oil production to 5m b/d by 2009. ConocoPhillips operates Corocoro with a 32.5% stake. Its partners are PDVSA with 35%, ENI with 26% and Taiwan's OPIC Karimun with 6.5%.

PDVSA also wants ConocoPhillips to bring forward plans produce 1 TCF of natural gas from Corocoro. Under the original plan, gas production was to be part of the second phase. The field's recoverable reserves have been estimated at 450m barrels of oil and up to 2 TCF of natural gas.

In addition to Corocoro and Deltana's block 2, ConocoPhillips has stakes in the Petrozuata, Ameriven and Hamaca extra-heavy crude oil upgrade ventures in the Orinoco Tar Belt.

Chevron Operations: Chevron produces more than 100,000 b/d as the operator of the Boscan and LL-652 oilfields. Both are in western Venezuela. Chevron is one of the first majors to have agreed in principle to convert its OSA for these fields into JVs.

Chevron has made a major gas discovery in the gas-rich Plataforma Deltana, an offshore area adjacent to the border with Trinidad & Tobago and is hoping to become an exporter of LNG from Venezuela (see Gas Market Trends No. 18). Chevron is also emerging as a major investor in Venezuela's in extra-heavy oil in the Orinoco Tar Belt (see below).