Venezuela signs offshore gas deals with foreign firms

www.forbes.com Reuters, 02.14.03, 5:44 PM ET CARACAS, Venezuela, Feb 14 (Reuters) - Venezuela signed deals with international energy firms on Friday to develop two offshore natural gas fields in a bid to diversify its strike-hit oil reliant economy. U.S. oil major ChevronTexaco (nyse: CVX - news - people) and Norway's Statoil <STL.OL> signed agreements to explore and produce Blocks 2 and 4 in waters in the northeastern Deltana region, bordering fields in gas rich Trinidad and Tobago. The deals come as the world's No. 5 crude exporter struggles to restart its oil industry, which normally provides half of state revenue. The oil sector has been crippled by a 10-week strike against President Hugo Chavez by employees of state oil firm Petroleos de Venezuela (PDVSA), wreaking havoc on the already troubled economy. OPEC member Venezuela is seeking to lessen its dependence on oil by building a 4.7 million tonne per year liquefied natural gas (LNG) export terminal, to be fed in part by Deltana gas. Neighboring Trinidad's LNG project is one of the biggest in the Atlantic basin. "For Venezuela, this act... is a sign of victory," Chavez said at the signing ceremony on Friday. Venezuela could begin exporting LNG by 2008, oil minister Rafael Ramirez has said. Analysts say production of Deltana must begin quickly if the nation is to capture natural gas demand in its targeted market, the United States. Chevron offered a bonus of $19 million for Block 2, while Statoil will pay $32 million for Block 4. British oil major BP <BP.L> is negotiating separately for Deltana's Block 1. All firms will partner with PDVSA. The energy ministry rejected a $100,000 bid by French TotalFinaElf <TOTF.PA> for Deltana's Block 3, as the government said the offer did not satisfy "expectations".