Ministry of Energy & Mines. Agenda Ministry of Energy & Mines Venezuela Legal Framework up to 100% of private participation 34% Income Tax HOL …a solid

Ministry of Energy & Mines




Agenda


Venezuela Legal Framework

• up to 100% of private participation

• 34% Income Tax

HOL HOL

…a solid and clear legal framework provided by the Organic Laws subjected to the Venezuelan Constitution… and open to Interantional Investors

• up to 49% of private participation (oil)

• 30% Royalty

• 50% Income Tax

• up to 100% of private participation

• 20% Royalty

• 34% Income Tax

GHOL

HOL: Hydrocarbon Organic LawGHOL: Gaseous Hydrocarbon Organic Law

Upstream: Downstream:

• Partners InputFirst class exploration and developmentTechnological and financial resourcesEnvironmental high performanceAccess to international LNG Re-Gas

capacity & gas marketsCommitted to national sustainable

development and maximize local content








Offshore Potential Resources

Source: PECA / Exploration Resource Base 2000

Blanquilla

Plataforma Deltana*

Golfo de Venezuela Carúpano 1.4 BBL 16 TCF

4.2 BBL 10 TCF

Ensenada 1.3 BBL

1 TCF

7.0 BBL 22 TCF

Falcon NE 1.5 BBL 9 TCF

3.2 BBL38 TCF

Mariscal Sucre10-14 TCF P.

GDP 2-3 TCF P.

7.6 TCF P.P.P.

97 WELLS; 35 EXPLORATORY: 15 PROVED HYDROCARBONS

121.775Kms Seismic 2D/12800 KM2 Seismic 3D

POTENTIAL RESOURCES: OIL: 18 BBL GAS : 95 TCF


Eastern Offshore Development

Golfo de Paria

GUIRIA

Mariscal Sucre

GPOGPE

MATURIN

CIGMA

INTERNATIONAL MARKET

DOMESTICMARKET

Plataforma Deltana

B2

B3

B4B1

B5

T&TT&T

Other Areas

Other Areas

IMPLEMENT THE MASTER PLAN: • Maximize local content• Sustainable development• Technologies• Business case• Continuous review

IMPLEMENT THE MASTER PLAN: • Maximize local content• Sustainable development• Technologies• Business case• Continuous review


Plataforma Deltana

1DORADO-1

4

3

LAULAU-1

LORAN-1

COCUINA-1

5BORA 1X

2

DORADO-2

B1 - 64 KMB1 - 64 KM2 2 Reserved for business opportunities

B4 - 1.433 KMB4 - 1.433 KM22 Licensee Statoil

B5 - 3.743 KMB5 - 3.743 KM22 Future Growth

B2 - 169 KMB2 - 169 KM22 Licensee ChevronTexaco & ConocoPhillips

B3 - 4.031 KMB3 - 4.031 KM22 Licensee ChevronTexaco

BLOCKS 2 & 4• Minimum Program: 6 exploratory wells• Operation starts: August 2004 • Partners Investment Plan 2004 = 107 MM$ - 4 wells• Market Commitment • PDVSA Participation up to 35% with commerciality


Plataforma Deltana Schedule

2000 2001 2002 2003 2004 2005 2006 2007 2008

First Production

2009

PHASE I 4 wells

PDVSA 180 M$PHASE IILicences

•INITIAL STUDIES•PERMITS

Exploration & AppraisalPDVSA

DEVELOPMENT & INFRASTRUCTURE

DEVELOPMENT DRILLINGBusiness B2/B4

Exploration & AppraisalPartners 300 M$

Local Content Strategy

UNITIZATION

B3/B5

Local Content Strategy Partners

DC

• FIRST PDVSA OFFSHORE OPERATION IN 20 YEARS

• GAS EXPLORATION

• PLATAFORMA DELTANA´S MODEL


Mariscal Sucre LNG Project

11º

10º 40º45º50º55º62º05º15º20º25º30º35º40º45º

35º

40º

45º

50º

55º

11º

05º

10º

0 5 10 15

KmRío Caribe

(1.8)

Mejillones(3.3)

Patao(4.4)

Dragón(4.8)

PENINSULA DE PARIA

LNGGUIRIA

COES: 191 MMB

PRELIMINARY DEVELOPMENT AGREEMENT:PDVSA: 60%, SHELL: 30% ,MITSUBISHI: 8%, Venezuelan Entities: 2%

NORTH PARIA FIELDS (14.3 TCF; 1.1 BCFD)

ONE LIQUEFACTION TRAIN (4.7 MT/Y)

INVESTMENT: US$ 2.7 B


LNG Value Chain

Altamira

Lake Charles

Elba Island

Everett

Cove Point

GOM

NewBrunswick

Bahamas

• ConocoPhillips: Freeport - 1.5 BCF/d • ConocoPhillips: Freeport - 1.5 BCF/d

• Shell: Cove Pt /Elba Island - 0.7 BCF/d • Shell: Cove Pt /Elba Island - 0.7 BCF/d

• ChevronTexaco: Port Pelican - 1.5 BCF/d • ChevronTexaco: Port Pelican - 1.5 BCF/d

• Statoil: Cove Point - 0.7 BCF/d • Statoil: Cove Point - 0.7 BCF/d

T-E

GÜIRIAAREA

DE ORDENACIÓN

HELIDECK

RECREA-TIÓN

INCLUDES: - SERVICE DOCKPLOTS: - LNG PLANTS - PETROCHEMICAL - REFINING - WAREHOUSING - INDUSTRIAL PARK

6,300 HaONSHORE

11,000 HaOFFSHORE

GOLFO DE PARIA

San Juan de Unare

Río San Juan

Punta Campana

Peninsula Paria

San Juan de las

GaldonasQuerepare

11.000 ha

Caño Morrocoy

IrapaYaguaraparo

Isla Antica

MAR CARIBE

GÜIRIA

Soro

Yoco

CIGMA6.300

Mapire

MejillonesCacao

Planicie Soro-Güiria


E&P- MARKET ALINGMENT

BUSINESS CASEBUSINESS CASE

Natural Gas Growing demand 2025: 2.8% • 90 to 176 TCF/year

USA:• Prices projection: 4-5 $/MillionBTU• Demand: 23 to 31 TCF/year (63 to 85 MillionCF/d)• LNG: 2,000 to 15,000 MillionCF/d

E&P

Net-Back Pipeline LNGMARKET•Shipping•LNG Terminals•Sales

Value Chain

Annual Energy Outlook 2004 National Petroleum Council, Sept. 2003


2003 2004 2005 2006

GOLFO VENEZUELA INTERNO + FALCON NE

BLANQUILLA

CARUPANO

FACHADA ATLANTICA

ENSENADA BARCELONA

CUBAGUA

PLATAFORMABLOQUES 2, 3, 4 Y 5 2009 - 2012

2008 - 2010

2010 - 2012

2011 - 2012

2015 - 2020

2010 - 2012

2011 - 2012

2015 - 2016

TUY - CARIACO

LICENSE GRANTING

DATA BLOCKS DEFINITION

PARTNERSHIPSTRATEGY

BIDDINGAPPROV.

Spec. Survey or Group Shooting

Exploration 2003-2008Exploration 2003-2008800 Million$800 Million$

Development: 2.5 MillionBPD 6.8 BCFD2.5 MillionBPD 6.8 BCFD

6.0 B$ 2004/20096.0 B$ 2004/2009(4.0 B$ by Partners) (4.0 B$ by Partners)

Exploration 2003-2008Exploration 2003-2008800 Million$800 Million$

Development: 2.5 MillionBPD 6.8 BCFD2.5 MillionBPD 6.8 BCFD

6.0 B$ 2004/20096.0 B$ 2004/2009(4.0 B$ by Partners) (4.0 B$ by Partners)

¿ What is Next ?





0

200

400

600

800

1000

1200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Synthetic crude oil and productsSynthetic crude oil and products

Thbd

101

368

453543

301

PETROZUATA

CERRO NEGRO

SINCOR

HAMACA

556

BnBORIGINAL OIL IN PLACE 1,360TOTAL RESOURCES 272PROVEN RESERVES 37PRODUCING RESERVES 14Only 5% of the total resources has been developed


On going

Orinoco Belt Opportunities


Orinoco Belt Opportunities

0

200

400

600

800

1000

1200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Synthetic crude oil and productsSynthetic crude oil and products

Thbd

101101

368368

453453543543

556 synthetic301301

PETROZUATA

CERRO NEGRO

SINCOR

HAMACA

556556



On going

Poten

tial

600

800

1000

400

400 ThBD (Synthetic crude oil)

GRASS ROOT

765

850

1000

200 ThBD TIER II products (JET/DIESEL) or

others

200 THBD High quality products TIER II or

others (JET/DIESEL)

200 ThBDQuality products TIER II or others

Industrialization opportunities

potential expansions of on going business +

sinergies

SCO to Products


Orinoco Belt...Oil Productivity Evolution

BD / WELL

80 9585 200090

1500 - 3000

VERTICAL WELLGRAVEL PACK

1000 - 2000

HORIZONTAL WELLS 1500’, ESP, DILUENT

INJECTION

MULTILATERALSWELLS

HORIZONTAL WELLS4000 - 5000’, ESP,

MULTIFASIC PUMPS

400 - 600

100 - 200

600 - 1200

MECHANNICAL PUMP

Productivity per well was 300% improved in the last 20 years Productivity per well was 300% improved in the last 20 years

8.0 $/Bl a 3.0 $/Bl

3.0 $/Bl a 1.0 $/Bl

2003


Cost Per Barrel Structure

UPSTREAM COST: 1 $/B

UPGRADING COST: 2 - 3 $/B

TOTAL OPEX: 3 - 4 $/B

AMORTIZATIONS & FINANCIAL: 4 - 5 $/B

TOTAL COST/BARREL: 7 - 9 $/B

UPSTREAM COST: 1 $/B

UPGRADING COST: 2 - 3 $/B

TOTAL OPEX: 3 - 4 $/B

AMORTIZATIONS & FINANCIAL: 4 - 5 $/B

TOTAL COST/BARREL: 7 - 9 $/B

Compare with Canada Tar Sands - Bitumen: 9 to 13 $/Bl





Petro AméricaInitiative

Petro Caribe

On Going: San Jose and Caracas agreements Fuel suplly to Argentina CILA activities

Petro Sur Petro Andina

Refining & Petrochemicals

Refining & Petrochemicals

Marketing & Supply

Marketing & SupplyGasGas

Latin America and The Caribbean

ExplorationExploration

ProductionProduction

On Study: Gas from and to Colombia Grass root refinery in Brazil Petrocaribe


On going projects show the level of commitment of Venezuela to become

a major LNG supplier by IQ 2009 (MSP and PDP).

Major oil companies accepted to sign a PDA under the new Venezuelan

Hydrocarbon law because it provides legal rights for foreign investors:

Major and medium Oil companies has submitted business

proposals for upstream developments, Ex. Orinoco Belt,

Exploratory areas.

So far 10.5* Bn USD have been announce by third parties as its

commitment with PDVSA 2004-2009 Business Plan.

Complementary route map for business engagement final stages are on

development, to be realeased soon.

Facts speak louder than words

* Source:AVHI




Documents

Ministry of Energy & Mines. Agenda Ministry of Energy & Mines Venezuela Legal Framework up to 100% of private participation 34% Income Tax HOL …a solid