Spain's Repsol YPF and Eni of Italy are poised to announce that a large gas find in Venezuela has 30 per cent more reserves than thought when it was unveiled eight months ago.
According to industry officials, the Hispano-Italian consortium has identified recoverable reserves of between 2.1 and 2.4 trillion cubic feet (tcf) of gas, in addition to the seven to eight tcf announced in Spain by Hugo Chávez, the Venezuelan president, in September 2009.
The new volume means the exploration area holds recoverable resources of between 1.6bn and 1.85bn barrels of oil equivalent (boe). This compares with total booked reserves at Repsol, for example, of about 2bn boe.
The original deposit, whose volume was assessed after drilling the Perla 1X well in shallow waters in the Gulf of Venezuela, was already the biggest such find in the country last year. Repsol and Eni, which are in a 50-50 joint exploration venture in the area, could announce the latest upgrade as early as today, following tests on a second well.
Venezuela's state-owned oil company PDVSA will take a 35 per cent stake at the development phase of the Perla fields, leaving Repsol and Eni with 32.5 per cent each. The upward revision will provide a boost for Repsol, which has invested billions of euros in recent years - particularly in Venezuela and neighbouring Brazil - to replenish one of the thinnest reserve portfolios in the industry.
This heavy capital expenditure, coupled with falling oil prices, last year forced the company to cut its dividend to investors.
The decision almost triggered a boardroom coup against Antonio Brufau, executive chairman, by the head of Sacyr, the Spanish construction group that holds 20 per cent of Repsol.
The two have since agreed a truce, although further challenges against Mr Brufau have not been ruled out.
In the meantime, he has proposed raising capital by bringing outside investors into Repsol's development projects in Brazil, and confirmed plans to reduce further its stake in YPF, the 84 per cent-controlled Argentine business.
The latter move is likely to include floating about 10 per cent of YPF on the Buenos Aires stock exchange. The capital reorganisation, expected to be implemented over the next 18 months, will be used to help finance further investment. About €12bn was earmarked for exploration and development between 2008 and 2012. As a result, Repsol announced 12 important finds in 2009, and numerous exploration deals, culminating in December with a licence to explore new blocks in southern Algeria. In the Santos Basin off the coast of Brazil, the Spanish company holds a large stake in the so-called Guará well.
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