Spanish oil and gas company Repsol has signed a significant new deal with Venezuelan state energy company PDVSA that will result in the Spanish company doubling its fossil fuel reserves in the country, making it one of the largest petroleum producers in Latin America.
Repsol has formed a joint venture with its Venezuelan partner to build a new gas liquefication plant and a new an 80-megawatt electricity plant. PDVSA will own 51% of the new joint venture, while Respol will have a 49% share. In addition, Repsol will increase its production of oil from the region by 60%.
The deal comes as a vital boost to Repsol’s operating health, as it comes in the wake of the Spanish company’s announcement that it had achieved a worryingly low 32.5% reserve replacement ratio for 2004.
The new agreement will provide immediate relief from the reserve problem as it will significantly improve the figure by allowing the company to count the acquired reserves, around 460 million barrels of oil equivalent, in its figures for 2005.
Meanwhile, production in Venezuela, which currently represents over 8% of the Repsol group total, would increase to 160,000 barrels of oil equivalent per day, up from 100,000 at present.