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C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001208 
 
SIPDIS 
 
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE 
HQ SOUTHCOM ALSO FOR POLAD 
TREASURY FOR MKACZMAREK 
COMMERCE FOR 4332/MAC/WH/JLAO 
NSC FOR DRESTREPO AND LROSSELLO 
 
E.O. 12958: DECL: 09/14/2019 
TAGS: EPET EINV ENRG ECON CU VE
SUBJECT: VENEZUELA: CHAVEZ'S EARLY ANNOUNCEMENT OF REPSOL'S 
NATURAL GAS DISCOVERY 
 
REF: A. 05 CARACAS 2807 
     ¶B. CARACAS 239 
     ¶C. CARACAS 853 
     ¶D. CARACAS 1017 
 
CARACAS 00001208  001.2 OF 002 
 
 
Classified By: Economic Counselor Darnall Steuart, for reasons 
1.4 (b) and (d). 
 
¶1. (C) SUMMARY: On Friday, September 11, President Chavez 
trumpeted that Spanish oil company Repsol had made a 
significant natural gas discovery in the Gulf of Venezuela. 
Repsol issued a press release reiterating President Chavez's 
statement.  This discovery was made in one of seven off-shore 
blocks offered in the 2005 Rafael Urdaneta Round.  Industry 
experts in Venezuela indicate that the announcement was 
likely premature, but cede that Repsol may have made a 
substantial natural gas discovery.  END SUMMARY. 
 
¶2. (C) President Chavez told the media that the Pearl 1 
offshore exploratory well drilled by the Spanish Repsol and 
Italian ENI consortium had discovered a reservoir of great 
potential, which could hold between 7 and 8 trillion cubic 
feet (TCF) of gas.  He stated that this was the largest gas 
find in Venezuela's history.  Repsol's press release notes 
that PDVSA will have a 35% stake in the development phase, 
with Repsol and ENI keeping 32.5% each. 
 
¶3. (C) A British Petroleum employee seconded to a PDVSA joint 
venture told EmbOff that the numbers announced by Chavez 
resembled an earlier, pre-exploration estimate by his 
company.  Chevron's Commercial Manager for Block 2 of the 
off-shore Platforma Deltana (PD2) in Eastern Venezuela, Bret 
Tarpley (strictly protect throughout), told Petroleum Attache 
(PetAtt) that if the field is as large as announced, it would 
be about the same size as PD2.  He thought it premature for 
Repsol to announce the numbers (NOTE: Repsol has only 
reiterated the numbers announced by Chavez) and was sure that 
Repsol had not yet tested the reservoir.  He noted that 
Chevron had drilled four test wells in PD2 before it could 
confirm the reservoir's size and added that a geologist with 
ENI shared that it had found "a small section of potential 
pay" in the Gulf of Venezuela.  (NOTE: As reported in Reftel 
D and previous, Repsol and ENI have a contract with U.S. 
drilling company ENSCO to drill one exploratory well (with 
the option for a second) in the Gulf of Venezuela.  ENSCO is 
anxious to re-export its rig from Venezuela so Repsol may 
face difficulties in contracting a rig to continue testing 
the reservoir.  END NOTE.) 
 
¶4. (C) Finally, xxxxxxxxxxxx , 
 for Pearl 1, confirmed to 
PetAtt that the discovery could be the largest natural gas 
find in Repsol's history.  However, he questioned the source 
of the numbers President Chavez announced, claiming an oil 
company would normally be more precise with the estimated 
size of a discovery. 
 
¶5. (C) COMMENT: It is not clear what the real size and 
characteristics of the newly discovered reservoir are, though 
7-8 TCF of natural gas appears to be the upper limit. 
Venezuela originally launched the Rafael Urdaneta project in 
the Gulf of Venezuela in order to increase domestic supply. 
In fact, western Venezuela is dependent upon natural gas from 
Colombia for domestic residential and industrial demand. 
Since the government provides subsidized natural gas to 
domestic users, an international oil company will find 
developing a profitable business model challenging. 
 
¶6. (C) It is not unusual for President Chavez's announcements 
to be erroneous in fact, but accurate in direction.  Earlier 
this summer he announced the completion of a test well in the 
Dragon block of Mariscal Sucre.  Post later learned that in 
reality, the drill team had actually only completed drilling 
to the well's third zone (depth) of five planned zones. 
However, what is not in question is Venezuela,s actual 
 
CARACAS 00001208  002.2 OF 002 
 
 
record of developing its off-shore natural gas resources. 
Venezuela has been talking about the development of natural 
gas off Eastern Venezuela for the last twenty years but has 
yet to build a natural gas train.  During the same period, 
Trinidad & Tobago has completed at least four LNG trains. 
DUDDY