Subject: FW: Venezuela to Create Separate Government Gas Company
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked]
Date: Mon, 1 Oct 2001 06:59:48 -0700 (PDT)

Rick --

Trust that Neal is keeping you in the loop on Venezuela developments.
Chavez has tried twice to reach Richardson (he keeps on trying Richardson's
home phone numbers, despite our telling his office that Richardson can best
be reached at his work numbers).  Chavez has been forward-leaning in the
tone of his voicemail messages, and we understand from Neal that Enron has
received some positive signals from the Venezuelan government in recent
days.

Richardson is back from Europe today and we'll check with him on any Chavez
updates, as well as press to make phone contact if it hasn't happened in the
past few days.

Attached is the public announcement of the important changes in the gas
sector that we previewed for you some weeks ago.  Our assessment continues
to be that this change is more positive for the Jose project than not.

Best,

Nelson

-----Original Message-----
From: Stephen Donehoo [mailto:[email-masked]]
Sent: Thursday, September 27, 2001 6:40 PM
To: Neal Gerstandt (E-mail)
Cc: Bill Richardson; Nelson internet (E-mail)
Subject: Venezuela to Create Separate Government Gas Company

Neal,

FYI.  Sec. Richardson is in Europe so I have no word on Chavez.

Stephen

09/27 17:25
Venezuela to Create Separate Government Gas Company
By Patrick Gordon
Caracas, Sept. 27 (Bloomberg) -- Venezuela's Energy and Mines Ministry plans
to create a state-owned gas company as the country begins a campaign to
boost natural gas production.
The new company will replace PDVSA Gas, a subsidiary of the state oil
company Petroleos de Venezuela SA now in charge of the gas industry, said
Luis Vierma, director policy and planning for the Energy and Mines Ministry.
``Until now gas has always been placed in line behind oil at PDVSA,'' said
Vierma. ``We need a company that will focus on gas.''
He added that the as yet unnamed company will start operations before the
end of the year. Venezuela has about 147 trillion cubic feet of natural gas
reserves, the largest in Latin America and the seventh largest in the world.
Venezuela produced 3.42 billion cubic feet of gas in 2000, compared with 3.5
billion a year earlier.
The new company is being created as the South American country has increased
its emphasis on natural gas production.
Venezuela sold rights to six natural gas tracts in June, the first time
since it nationalized the oil and gas industry in 1975- 1976 that private
companies could participate in the exploration and production of natural
gas.
Critics said the removing natural gas production from PDVSA would be
inefficient and increase costs.
``It doesn't make any sense to separate the two businesses,'' said Luis
Giusti, former PDVSA president who is now a senior adviser for the Center
for Strategic and International Studies in Washington. ``Gas is usually
found with oil. That's why it's called the oil and gas industry,'' said
Giusti.
Venezuela and private companies may invest up to $50 billion over the next
30 years to develop Venezuela's 100 trillion cubic feet of probable offshore
gas reserves, he said.
Exploratory drilling for gas would begin Dec. 15 at the Deltana Platform off
the eastern coast, said Vierma.
Natural gas for November delivery rose 37.1 cents, or 16 percent, to $2.62
per million British thermal units on the New York Mercantile Exchange.

?2001 Bloomberg L.P. All rights reserved.