Repsol Says Venezuela Gas Find With Eni Contains Oil (Update1)

Repsol YPF SA, Spain’s biggest oil company, said tests on a natural gas well offshore Venezuela drilled with Eni Spa revealed the presence of crude oil, which the government said may help speed the field’s development.

The Cardon IV field ranks as Venezuela’s largest gas discovery and one of the world’s five biggest finds in 2009, the Madrid-based company said late yesterday in a statement. The well, called Perla 1X, produced 620 barrels a day of oil, “limited by the specifications of the installation,” the company said.

The 33 square-kilometer (13 square-mile) field contains the natural-gas equivalent of between 1 billion and 1.4 billion barrels of oil, Repsol said. That is about 5.5 to 7.7 trillion cubic feet of gas, more than the total reserves of neighboring Colombia, which now exports the fuel to Venezuela.

The presence of oil will ease financing for field development, Venezuelan Energy and Oil Minister Rafael Ramirez said on state television. The field will produce very light “crude condensate,” with a gravity of 50, he said. Light oil, with a higher gravity, sells for more than heavy oil. Much of Venezuela’s output has a gravity of 16.

Repsol wants to boost oil and gas production through new discoveries off the coasts of Brazil and Venezuela after four years of declining output, while Venezuela aims to increase natural gas output to overcome a deficit. It currently imports about 250 million cubic feet a day from Colombia.

Development of the field, the company’s largest discovery, will take four or five years, Repsol Chief Executive Officer Antonio Brufau said in an interview Sept. 14.

Venezuela’s Stake

Venezuelan President Hugo Chavez first announced the discovery last month, after conversing with Brufau. At the time Chavez said the field may contain 8 trillion cubic feet of gas, while Repsol said it was still under evaluation.

Petroleos de Venezuela SA, also known as PDVSA, will get a 35 percent stake in the project, with Repsol and Eni splitting the remainder, Repsol said yesterday. “The results of the well exceeded pre-drill expectations,” Eni said in an e-mailed statement today.

Venezuela has 174.9 trillion cubic feet of natural gas reserves, the largest in South America. The country had 2.6 percent of the world’s proved natural-gas reserves in 2008, or the ninth-largest in the world, according to BP Plc.

The well was drilled by a jackup oil rig called the Ensco 68. Venezuela nationalized a similar rig, the Ensco 69, when Ensco International Inc. halted work amid a payment dispute.