Today Moscow saw the signing of an Agreement on evaluation and certification of the Ayacucho-3 block reserves of the Orinoco Oil Belt in the presence of Dmitry Medvedev, the President of Russia and Hugo Chavez, the President of Venezuela.

Pursuant to the Agreement Gazprom’s subsidiary, Gazprom Latin America B.V., will jointly with Petroleos de Venezuela SA (PdVSA) complete geological modeling, evaluation and assessment of the block’s reserves before the end of 2008 to be subsequently certified by an independent auditor.

A decision was also adopted to launch the preparation of an investment feasibility study for the development of the heavy oil field located in this area.

At the negotiations the Venezuelan party also expressed its interest in Gazprom’s participation in the Delta Caribe Oriental liquefied natural gas project, which includes the Mariscal Sucre and Platforma del Tanŕ fields development as well as construction of an LNG plant in Venezuela.

Additionally, the parties discussed the progress with implementing the Rafael Urdaneta project and opportunities for the companies’ cooperation in the gas infrastructure construction in Venezuela.

Background:

Being the first-largest in Latin America, Venezuela’s proven natural gas reserves account for 4.3 tcm, while its oil reserves make up 11.2 bln tons (7 per cent of the global reserves). Venezuela annually produces some 30 bcm of gas. The shares of natural gas, oil and hydropower in Venezuela’s energy mix make up 41, 38 and 21 per cent, respectively. All produced gas is fully consumed within the country. Venezuela doesn’t import or export gas.

The monopoly right to produce natural gas is held by the Venezuelan state-run oil and gas company Petroleos de Venezuela S.A. Venezuela participates in the project for the transcontinental pipeline system construction in the South America. It will link Venezuela, Brazil, Argentina, Uruguay, Paraguay, and Bolivia in the unified energy network.

Gazprom operates in Venezuela under the Memorandum of Understanding signed with PdVSA is January 2005. The Memorandum envisages Gazprom’s participation in the certification project for the Ayacucho-3 block reserves located in the Orinoco Oil Belt, central part of Venezuela. According to the PdVSA’s assessment the block’s oil reserves account for 5 bln tons.

Furthermore, Gazprom signed with the Venezuelan party contracts to elaborate the General Scheme for the gas industry development in Venezuela and conduct activities related to imaging creation for the first stage of the South American gas pipeline.

In September 2005 Gazprom was proclaimed the winner of a tender for prospecting and development of natural gas fields in the Gulf of Venezuela within the Rafael Urdaneta project (Urumaco 1 and Urumaco 2 blocks). In May 2007 as part of executing terms stipulated in obtained licenses, the first stage of exploration works was completed. The parties also decided to drill exploration wells.