About 10 Tcf of gas stranded offshore Venezuela could be headed to the U.S. East Coast via liquefied natural gas (LNG) tanker starting in 2007, according to a new partnership formed by Venezuelan state-owned oil company Petroleos de Venezuela (PDVSA), Royal Dutch/Shell Group and Mitsubishi Corp. The companies signed an agreement to spend $2.5 billion on a new LNG project on the Paria peninsula. Construction is scheduled to begin in 2005 and be completed two years later.

The Paria LNG project is critical to launching Venezuela as a major gas producer and exporter. It will also allow the development of stranded gas fields south of Trinidad on the Orinoco Delta platform. Shell will have a 30% stake and Mitsubishi will hold 8% and PDVSA will holder the remainder with a possibility of selling a portion to Qatar and possibly a small amount to the public via a local stock exchange.

President Hugo Chavez hailed the agreement as evidence that Venezuela is still attractive to investors despite a new oil law requiring PDVSA to hold a majority stake in most joint ventures. Business leaders complained the law, which also raises royalty rates to among the highest in the world, would send investors to other oil producing nations. Venezuela has nearly 150 Tcf of natural gas reserves, the highest of any Latin American country.

Chavez also confirmed that Venezuelan oil minister, Alvaro Silva, is the country’s candidate for OPEC secretary general. The Organization of Petroleum Exporting Countries has reached consensus to choose a Venezuelan for the post but “we have to wait on whether there will be consensus on Silva,” Chavez said. The position will become vacant June 26, when Venezuelan Ali Rodriguez resigns to take over as PDVSA president. Rodriguez agreed to cut short his term as secretary general to help bring stability to PDVSA, where managers recently staged a strike that helped trigger a failed coup.

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