By an OGJ Correspondent
PORT OF SPAIN, Mar. 25 -- Venezuelan Minister of Energy and Mines Rafael Ramirez has announced that the two major oil companies negotiating with his government for blocks in the potentially lucrative Plataforma Deltana area will have to wait to proceed with exploration and development plans until Venezuela concludes its reservoir unitization negotiations with the government of Trinidad and Tobago.
Speaking at a joint news conference in Port of Spain, Ramirez said the companies were told that they had no choice but to wait until the negotiations were completed. However, on the Trinidad and Tobago side of the border, projects have been sanctioned based on gas being produced from the offshore cross-border fields.
The two majors affected by the decision are ChevronTexaco Corp. for Block 2 and Statoil ASA for Block 4. The Venezuelan energy ministry only last month selected the two companies to operate the two blocks under a program that envisions offering as many as five blocks in the gas-prone and highly prospective Plataforma Deltana area (OGJ Online, Feb. 10, 2003). Awarding the blocks on the Deltana Plataforma is the first step toward extracting nonassociated gas in the Delta Amacuro 200 km off Venezuela and near the maritime border with neighboring Trinidad and Tobago. Venezuela hopes to begin generating revenue from the blocks starting in 2007.
Ramirez said: "The companies are aware that the unitization process must be carried out, and this is a matter that must be resolved between governments. The companies must adapt themselves to the agreement between the governments. Those were conditions accepted by the companies."
Background
Trinidad and Tobago and Venezuela share several cross-border fields.
On Block 1, Venezuela's state-owned oil company Petroleos de Venezuela SA (PDVSA) drilled its Dorado 1 well, which is said to have discovered a structure containing 1.5 tcf of gas. This is matched on the Trinidad side of the border by BP Trinidad & Tobago LLC's Kapok field, which is an amalgamation of three finds¿Sparrow, Renegade, and Parang¿believed to contain close to 4 tcf of gas.
Block 2, where the Loran well was drilled in 1982, is shared on the Trinidad side with Block 6d, which is operated by BG Group PLC. While no drilling has taken place on the Trinidad side, it is estimated that the reservoir could contain as much as 4 tcf of gas.
Another field underlies Block 4, where PDVSA drilled its Coquina well in 1983, discovering shallow-pay cross-border reserves. This field is matched on the Trinidad side by BPTT's Manikin 1 discovery on Block 5b.
Last year, the two governments signed a letter of intent to work towards a unitization agreement (OGJ Online, Aug. 29, 2002). However, the process was stalled because of the internal problems faced earlier this year by the Venezuelan government.
The parties have given themselves a month to reach a memorandum of understanding on how the negotiations are to go forward.
Participation issues
Venezuela has already decided that its technical team on unitization negotiations will include officials from PDVSA and Venezuela's Ministry of Energy, but the Trinidad and Tobago government has yet to decide if it will allow officials from the operators on its side of the border to be included.
"We are indeed giving consideration to that," Trinidad and Tobago Energy Minister Eric Williams said regarding the involvement of operators in unitization talks. "As we deepen the process and come to conclusion with the memorandum of understanding, we will become a lot clearer on that process. . .Of course, it does help in an operational sense to do it that way. But there may be some other issues that we still need to satisfy."
Venezuela also has offered Trinidad and Tobago to partner with it in the blocks either directly or through the Caribbean twin-island nation's state-owned company Petroleum Co. of Trinidad & Tobago Ltd.
Ramirez said there was no firm decision on the extent to which PDVSA would participate in the blocks, but the agreement his government has with the multinationals would allow participation amounting to 1-35% of interest in the blocks by PDVSA or any other partner PDVSA chooses.
He said: "In all of these blocks we have a majority partner. The state will reserve a participation for either PDVSA or the partners it decides. In addition, the major business partner selects a minor partner .We also introduced in these contracts national participation as a concept for development. All the companies committed themselves to including the largest possible proportion of national participation within the effort."
Williams said Trinidad and Tobago is interested in participating, but the government would have to study the offer.
"One would have envisaged that if we were to decide that it was something we wished to do, we would discuss what percentage each partner would have in the blocks on either side. But clearly these are early days yet, and these are issues we will have to discuss in more detail. There are all sorts of issues that fall out from that. There are regulatory issues, there are taxation issues, there is a whole range of issues. But the intent as we understand it is to deepen the cooperation between the two governments as we develop our national patrimony."
Williams acknowledged that even though negotiations have not been concluded, Trinidad and Tobago has already approved projects requiring gas from the cross-border fields. But this would only hasten the negotiating process, he added.
He said: "Some of the developments that have to take place for Train 3 (of the Trinidad-based Atlantic LNG export plant) involves some of the cross-border fields. In addition, it is expected that gas from these fields will go to Train 4, which is being negotiated at present. I think these developments would cause us to move forward with a certain degree of urgency in these discussions."
Ramirez said Venezuela is not concerned about the situation because it enjoyed friendly relations with Trinidad and Tobago and is willing to work with its neighbor.
He said: "Trinidad and Tobago is a sovereign state, and it has its own development plans. We are talking about two sovereign countries that are friends and (about) the possibility of coordinating our plans again. I would like to highlight that this is an opportunity for collaboration, and that is what we are going to do."
Ramirez added: "In relation to the development of gas in both countries, Venezuela and Trinidad and Tobago have plans for national development. But what we are exploring is how cooperation plans may help both countries."