Venezuela LNG project moves forward

Partners in the Venezuelan Paria North LNG plant project are moving ahead with the project by signing a preliminary development agreement. Previously, partners Mitsubishi Corp., Royal Dutch/Shell Group, and ExxonMobil Corp. signed a memorandum of understanding for the project (OGJ, Apr. 3, 2000, p. 32). The new agreement provides for a feasibility study and determination of resources required. Once it is complete, the companies plan to sign a joint venture agreement.


Partners in Venezuela's proposed Paria North LNG project have taken another step forward by signing a preliminary development agreement. Previously, partners Mitsubishi Corp., Royal Dutch/Shell Group, and ExxonMobil Corp. signed a memorandum of understanding to undertake the project with state firm Petroleos de Venezuela SA (OGJ, Apr. 3, 2000, p. 32). The new agreement provides for a feasibility study and determination of resources required. Once it is complete, the companies plan to sign a joint venture agreement.

The $2 billion LNG facility will have production capacity of 4 million tonnes/year. It will use gas from offshore fields north of the Paria Peninsula. Production is scheduled to begin in 2005.

The feasibility study will comprise two phases. Phase 1 will last 3 months and will determine the commerciality of the project. Phase 2 will last 5 months and will determine the best schemes for field and liquefaction plant development, including site selection and technical process optimization studies. Discussions with potential buyers will continue with a view to obtaining conditional sales and purchase agreements.

The participating companies plan to emphasize the use of Venezuelan goods and services.

At the end of the second phase, the companies are expected to sign a formal joint venture agreement. Shell will hold a 30% interest in the project; ExxonMobil, 29%; and Mitsubishi, 8%. The remaining 33% will be held by PDVSA.

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