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Shell To Invest $100M In Venezuela In 2004

The Wall Street Journal: Shell To Invest $100M In Venezuela In 2004

DOW JONES NEWSWIRES

June 15, 2004 4:43 p.m.

Posted 16 June 04

MARACAIBO, Venezuela — Royal Dutch/Shell (RD, SC) plans to invest $100 million in Venezuela this year, mainly in the Urdaneta oil field it operates in the Lake Maracaibo region, Joaquin Moreno, the president of Shell ´s Venezuela operations, said Tuesday.

“In 2004 we will invest $100 million, fundamentally in Urdaneta and maintaining a presence in service stations,” said Moreno, speaking to journalists on the sidelines of an oil conference.

He said the company invested $85 million in Venezuela in 2003.

The Urdaneta field currently produces 55,000 barrels a day, up from around 48,000 b/d at the end of 2003. He said he expects a slight increase in output at the field by the end of this year, but the complexity of the area makes it difficult to ramp up production fast.

“It is a complex field,” said Moreno. “Each well is a technological challenge,” he added.

Shell is currently unwinding its presence in Venezuela’s retail gasoline market, and Moreno said the company has already sold off 100 of the 180 service stations it operated at the start of the year. Venezuelan gasoline prices have been fixed since the mid 1990s, and Shell cited poor margins as a reason for dropping the business.

Concerning the Mariscal Sucre natural gas project, Moreno said negotiations with the government are advancing, and that Shell still expects exports to begin in 2009.

Shell has signed preliminary agreements with state oil company Petroleos de Venezuela SA, or PdVSA (PVZ.YY), to take a 30% stake in the project. If the joint venture agreement goes through, Shell would invest in exploratory wells and engineering over the next two years.

Shell plans to export Venezuelan natural gas to terminals it operates in the Gulf of Mexico and the U.S. east coast. Shell expects total investment in the project to range from $2.5 billion to $3 billion, which includes the construction of a liquefaction plant to convert natural gas into into Liquid Natural Gas, or LNG, which is easier to export.

-By Peter Millard; Dow Jones Newswires; 58-414-249-6821; [email protected]

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