Venezuelan's latest bidding round tops $2 billion

High bidders in Venezuela's Third Marginal fields round [66474 bytes]

Companies submitted more than $2 billion for acreage offered by the Ministry of Energy and Mines and Petroleos de Venezuela SA (Pdvsa) in Venezuela's third round of marginal and inactive fields.

On June 2, Pdvsa and units Corpoven SA, Lagoven SA, and Maraven SA began disclosing individual high bids for 20 field areas slated for reactivation. The sale area, covering 1.9 million acres in Venezuela's eastern and western basins, is estimated to contain 2-3 billion bbl of reserves (see map, OGJ, Nov. 11, 1996, p. 42).

Ninety-one companies representing 15 countries offered $2,171,719,344 in high bids for 18 field areas (see table, p. 28). Bids totaled 133.

Areas that did not receive bids were Cretacico Sur and Bachaquero Sur Oeste.

Pdvsa completed bid disclosures June 6.

Initial bidding

High bids on an initial five areas included Intercampo North, Mata, Kaki, Maulpa, and Casma Anaco (OGJ, June 9, 1997, p. 20):

Intercampo North. China National Petroleum Corp. submitted a high bid of a little more than $118 million for this 39-sq km field area, which has cumulative production of 178 million bbl of oil.
Mata. PBE Trading Co. and Productos Industriales Venezolanos SA submitted a high bid of about $90.8 million for the 212-sq mile area. It has cumulative production of 142 million bbl.
Kaki. A group consisting of Venezuela's Inelectra SA, ARCO International Oil & Gas Co., and Polar Uno CA, also of Venezuela, submitted a high bid of a little more than $60 million for the 305-sq mile area.
Maulpa. The Inelectra/ARCO/
Polar Uno group was also high bidder for the Maulpa area, offering about $61.4 million.
Casma Anaco. A Venezuelan group consisting of Cosa-Ingenieros Consultores CA, Cartera de Inversiones Venezolanos CA, and Phoenix International CA offered a high bid of about $27.6 million for the 137-sq km area.

Top three bidders

With an offer of a little more than $453 million, U.K.'s Lasmo plc cast the highest bid in the round for a 100% interest in the Dacion area in Anzoategui state of eastern Venezuela.

Lasmo, successful in its first entry into Venezuela, bested a combine of Argentina's Perez Companc SA and Canada's Norcen Energy Resources Ltd., which offered $402 million for the 428-sq km onshore area.

Spain's Repsol SA was the round's second-highest bidder, offering a little more than $330 million for a 100% interest in the 123-sq km Mene Grande area in western Venezuela east of Lake Maracaibo. Next highest Mene Grande bid was submitted by a Chevron Corp.-Den norske stats oljeselskap AS (Statoil) 50-50 combine, which offered about $187.6 million.

A group led by Chevron with a 30% interest and partners Statoil 30%, Phillips Petroleum Co. 20%, and ARCO 20%, was successful in a $251.3 million bid for the LL-652 area, covering 82 sq km, northeast of Lagunillas field in Lake Maracaibo in Zulia state.

The group, which cast the third-highest bid in the round, is obligated to spend $45 million during 3 years to boost output and upgrade the area. LL-652 area has produced 198 million bbl of oil cumulatively since the first discovery was drilled in 1953.

Lasmo's Dacion plans

Lasmo's Venezuela bidding is consistent with its plans to apply advanced enhanced oil recovery technology to fields in countries seeking outside investment.

Lasmo said its investment in the area could exceed $750 million during the first phase of redevelopment. It's required to spend $16 million during 3 years-excluding exploration-to drill new wells, work over existing wells, rehabilitate the production infrastructure, and begin improved-recovery programs.

According to estimates by current Dacion operator, Corpoven, significant oil stands to be recovered from the area, which has produced only about 14% of the 2.2 billion bbl original oil estimated to be in place.

The area contains three producing fields that have produced a cumulative 305 million bbl of oil since the first discovery was drilled in 1944. Current production is 13,500 b/d of oil from 111 wells, and another 134 wells are inactive.

Lasmo said it expects to achieve ultimate recovery efficiencies of as much as 40%, and its initial production target is 90,000 b/d from the area.

Lasmo said it has formed a technology partnership with Schlumberger units to press additional exploration activities. Lasmo has the right to explore during the first 7 years of a 20-year contract period.

Lasmo said it worked with Schlumberger Geoquest in evaluating the area, and Schlumberger IPM will provide technical support in field development under an incentive-based service contract.

Chevron's LL-652 high bid

At more than $251 million, Chevron's Lake Maracaibo LL-652 area bid group offered $120 million more than the next highest bid, submitted by an Amoco Corp.-Total SA combine.

"We feel the value is there in the field," said David Steele-Figuerdo, president of Chevron Latin America. "LL-652 has the potential to produce 100,000 b/d."

Amoco and Total offered $131,172,287 for LL-652, currently operated by Lagoven.

The area is estimated to contain 2.5 billion bbl of oil in place and reserves of more than 500 million bbl. Current production is 11,700 b/d from 109 wells. Forty-nine wells are inactive.

Other Lake Maracaibo bids

Pennzoil Exploration & Production Co. (Pepco) and partners were successful bidders on two areas in eastern Lake Maracaibo, B2X-68/79 and B2X-70/80, with bids of $46 million and $1.3 million, respectively.

The bid group for B2X-68/79 included operator Pennzoil 60%, Saudi Arabia's Nimir Petroleum Co. Ltd. 20%, Ehcopek SA 10%, and Cartera de Inversiones Venezolanas CA 10%, both of Venezuela.

Ehcopek specializes in construction of offshore platforms, flow stations, riser systems, steam plants, and pipelines; Cartera de Inversiones Venezolanas is a holding company with concerns in financial, industrial, and real estate sectors.

Ehcopek's focus has been on work in the Lake Maracaibo area, and it has a main fabrication complex at Ciudad Ojeda-Edo in Zulia state, adjacent to the B2X-68/79 area.

The area has 39 active wells that are producing about 2,500 b/d. Minimum investment during the first 3 years is $12 million.

The bid group for B2X-70/80 included Pennzoil 50% and operator PanCanadian Petroleum Ltd., Calgary, 50%. B2X-70/80 has 72 active wells and is producing about 5,800 b/d. Minimum investment is $17 million during the first 3 years.

The latest contracts increase Pennzoil's position in Venezuela to three contract areas. Its onshore East Falcon block in northwestern Venezuela is producing about 1,000 b/d.

Other bidding, plans

Reactivation of Maulpa and Kaki blocks is expected to get under way early in 1998, said Jay Cheatham, president of ARCO International, Plano, Tex.

ARCO, with operator Inelectra and Polar Uno, offered more than $121 million combined for the two areas.

Inelectra, a Venezuelan engineering firm with a 30% interest in Maulpa and Kaki, will operate both areas. ARCO has a 56% interest in both areas, and Polar Uno holds the remaining 14% interest in both.

ARCO is already involved in a crude oil upgrading project in the Hamaca region of Venezuela's Orinoco oil belt.