The cooperation between Gazprom and the Bolivarian Republic of Venezuela has been developing since 2005. That was the year when a Memorandum of Understanding was signed by the Russian gas company and Petroleos de Venezuela S.A. (PDVSA), Venezuela's state oil and gas company. The Latin American side suggested a multitude of promising areas for cooperation, ranging from searching for and exploration of oil and gas fields to processing crude and distributing the end product.
Gazprom's first project in Venezuela (and the whole of Latin America) was to participate in the tender for the exploration and development of natural gas fields in the Gulf of Venezuela. The tender was conducted by the Ministry of Energy and Petroleum of Venezuela within the framework of the Rafael Urdaneta project. In September 2005, Zarubezhneftegaz (currently part of the Gazprom International group) took part in the tender and won the right to carry out works on the Urumaco-1 and Urumaco-2 blocks. In accordance with the conditions of the tender, Gazprom established the Urdaneta-Gazprom-1 S.A. and Urdaneta-Gazprom-2 S.A. companies, which were designated as the operators of the corresponding licence blocks. The projected natural gas reserves in the area are estimated at nearly 100 billion cubic meters.
In 2006-2007, following the completion of the first stage of exploration works (3D seismic survey, preparation of geological prospecting drilling projects), the geological studies of the given blocks were completed in record time. In March 2007, the project was handed over to Gazprom (U.K.) Ltd., Gazprom’s other subsidiary, under the company’s instructions so that the project could be further implemented.
In July 2008, Gazprom and PDVSA signed an Agreement on the implementation of the study of a quantitative estimate and certification of the fields at the Ayacucho-3 block within the Orinoco Oil Belt. A data package was acquired and analyzed using PDVSA’s technical base under the agreement. Gazprom Latin America B.V. (part of Gazprom International) carried out the works on analysis and certification of the reserves at the block. A petrophysical and stratigraphic interpretation of 65 previously drilled wells was completed and a 3D geological model was created under the project. The in-place reserves were estimated at 1 billion tonnes, but, since the block contains high-viscosity oil, its recoverable reserves are believed to amount to 170-180 million tonnes. The possibility of the establishment of a joint venture by the Gazprom Group and PDVSA for development of the Ayacucho-3 block in the future is being studied.
Gazprom International took part in energy projects in Venezuela through Gazprom Latin America B.V. (its subsidiary) and Servicios Venrus S.A. (a joint venture with PDVSA, with Gazprom holding a 40% share).
The decision to establish this joint venture was taken in 2008. Its objective was to offer turnkey construction services (engineering, delivery and construction) for oil and gas industry facilities in Venezuela, installation and repairs of compressor stations at PDVSA’s production facilities, cleanout of oil sludge pits, drilling, repairing wells, etc.
Over the course of 2010, the Jusepin-120 (delivery and assembly of four phases of gas compression) and Santa Rosa-18 (delivery, installation and commissioning of two compressors) projects were implemented. The works, which were carried out successfully and rapidly, were highly praised by the management of PDVSA. In 2013, the San Joaquin project (comprehensive geological and geophysical studies at the San Joaquin, El Roble and Guario fields) was completed.
The Agreement on technological cooperation between Gazprom International and INTEVEP (PDVSA's project research institute), signed in July 2013, became a new milestone in the cooperation with Venezuela.
The following projects are currently implemented under the agreement:
The Merecure project: comprehensive geological and geophysical survey at the San Joaquin, El Roble and Guario fields;
The San Joaquin project: elaboration of new schemes of development of Anaco’s oil and gas deposits;
The Junin project: part of it is the study of oil production possibilities at the Junin and Boyaca blocks in the Orinoco Oil Belt;
The Technical Support project: specialized technical consulting services within the framework of the projects for geological exploration and comprehensive studies of the Orinoco Oil Belt.
An increased interaction with the Venezuelan partners is expected to come with the stabilization of the socio-economical and political situation in the South American country.
The Bolivarian Republic of Venezuela is one of the most picturesque countries of South America. The snowy peaks of the Andes, the Amazon Jungle and the sandy beaches, as well as the world’s highest waterfall, the Angel Falls, and the longest cableway are found in this Latin American country.
The great explorer Christopher Columbus discovered the northern coast of South America during his third voyage to the New World, and in 1499, the Spanish conquistador Alonso de Ojeda reached those territories. In the Maracaibo lagoon the conquerors saw some two dozen huts of the Warao people, built on stilts and interconnected with bridges. They reminded Italy’s Amerigo Vespucci, who arrived with the Spanish, of the city of Venice, so he called the settlement “Little Venice”, or “Venezuela” in Spanish, and eventually the name began to be used to refer to the entire country.
Venezuela is located in the northern part of South America. The country’s territory of 916,000 square kilometers is larger than the areas of England, France, the Netherlands, Belgium, Luxembourg and Switzerland combined. Venezuela is bordered by Colombia to the west and southwest, by Brazil to the south and southeast, by Guyana to the east, the Caribbean to the north and the Atlantic Ocean to the northeast. Nearly 40 islands in the Caribbean belong to Venezuela, the Margarita Island being the largest one. The narrow and sharp-cliffed straits, called The Serpent’s Mouth and The Dragon’s Mouths by Columbus centuries ago, separate Venezuela from Trinidad, the largest island of the Lesser Antilles.
Caracas is the capital of Venezuela. The President of the country is elected by a direct vote for a six-year term and is the Head of Government and State. The number of presidential terms is unlimited. Venezuela’s Parliament (the National Assembly) is unicameral. The members of Parliament can be elected for a maximum of three terms.
Venezuela consists of 23 states, one federal district (corresponding to Caracas), and federal dependencies (the aforementioned islands in the Caribbean). The states of Venezuela are grouped into nine administrative regions defined by a presidential decree.
Venezuela has humid weather in the summer and is dry and windy in the winter. The temperatures do not vary much over the course of the year and depend mostly on the elevation of the given zone. It is hot and humid on the coast and significantly more comfortable in the elevated zones. That is exactly why all major cities are located at altitudes between 600 and 1,850 meters above sea level. Each year, over three-quarters of the country’s territory is affected by the rainy season, which lasts from May to November.
Venezuela has a diverse and rich flora. For instance, sugar cane and coffee plantations are common in the Orinoco Basin. The flora of most southern territories resembles that of Amazonia. The catchment basin of the Orinoco River covers approximately four-fifths of the country. The fauna of Venezuela is also quite abundant, with crocodiles commonly found in rivers, and snakes and lizards in the jungle.
The economy of Venezuela is based on oil production, which accounts for over 80% of export revenue, more that 50% of the state budget revenues and nearly 30% of the GDP.
The state is implementing a policy aimed at increasing its control over the economy. In 2007, the oil, communications and energy sector companies were nationalized, and in 2008 the same happened to steel and cement production companies.
GDP per capita amounts to nearly $13,000. The industry accounts for 35% of the GDP (as of 2010). Apart from oil production, it is represented by: ore mining, production of construction materials, food and textile industries; steel and aluminum production; assembly of cars. The agricultural sector accounts for 4% of the GDP. Apart from oil, Venezuela exports bauxites, aluminum, coffee, coal, nickel, emeralds, bananas, and flowers.
The population of Venezuela is at 28 million with an annual growth of approximately 1.5%. Nearly 95% of the country’s populations live in cities. Ethnicities/races: Mestizo – 67%, Caucasian – 21%, African – 10%, Indigenous – 2%. The overwhelming majority of Venezuela’s population is Catholic Christian.
In November 2008, during the visit of Dmitry Medvedev, the then President of Russia, to Venezuela, an intergovernmental agreement was signed, which established a bilateral visa-free regime for travel up to 90 days. The agreement came into force in 2009.
That same year, the countries reached an agreement to attract Russian companies to Venezuela with the goal of developing oil and gas fields and building pipelines.
In 2013-2014, Venezuela’s revenues from oil exports decreased drastically due to the fall in global oil prices. The country’s Central Bank tried to cover the budget deficit through money creation, due to which inflation stood at 200% by the end of 2015. In the attempt to contain it, the government introduced a complex currency exchange system, as a result of which the official dollar exchange rate was more than 100 times higher than the market one.