On 4 October, in the presence of Hugo Chavez, President of the Bolivarian Republic of Venezuela, Paraguana hosted an awarding ceremony of hydrocarbon exploration and development licenses for Phase A of the Rafael Urdaneta project. Based on the bidding results, JSC Gazprom received from the Venezuelan Government licenses for the Urumaco I and Urumaco II investment blocks.

With the licenses granted over a 30-year period, the first four years of the project are scheduled to see the implementation of a geological exploration program embracing seismic survey and drilling of exploratory wells.

Hugo Chavez underscored that Venezuela was interested in using Gazprom’s oil & gas experience to be potentially applied in natural gas extraction, treatment and transmission (export inclusive) projects. In addition, Hugo Chavez expressed his satisfaction with Gazprom’s arrival in Venezuela, emphasizing that said move was of great significance for the country and should contribute to implementing a national plan surrounding development of the Venezuelan energy sector and economy in general.

Launching operations in Venezuela is another step of Gazprom towards becoming a world-class energy firm and building a full-cycle production & marketing chain on various continents.

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Being the second-largest in the Western Hemisphere after the USA, Venezuela’s proved natural gas reserves account for 4.1 tcm. In 2003, Venezuela extracted 29.7 bcm of natural gas. The country does not import or export gas and the entire gas amount produced is channeled to domestic consumers. The share of natural gas, oil and hydropower generation in Venezuela’s fuel and power balance stand for 41%, 38% and 21%, respectively. The length of the country’s gas pipelines totals 5,000 km.

Venezuela’s proved oil reserves amount to 11.2 bln t (7% of the global total), with Maracaibo, Falcon, Oriental and Apure being the largest oil fields. Over 2003, Venezuela recovered 153 mln t, consumed 24 mln t and exported over 100 mln t of oil. The US is the major importer of Venezuelan oil.

Although the exclusive right to produce natural gas is being held by the Venezuelan state-run oil and gas firm Petroleos de Venezuela SA (PDVSA), a limited number of joint ventures set up by PDVSA and foreign investors have been licensed to do it, as well.

In 1999, the Venezuelan Government enacted the Gas Law stipulating the inflow of foreign investments into the domestic gas industry.

In accordance with the bidding rules for the Urumaco I and Urumaco II blocks, Gazprom set up two joint-stock companies UrdanetaGazprom – 1, SA and UrdanetaGazprom – 2, SA.