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Eni, Repsol to Develop Perla Field - Analyst Blog

Venezuela's state-run energy company Petroleos de Venezuela S.A. (or PDVSA) has signed a natural gas supply contract with Eni SpA ( E ) and Repsol YPF SA for the commercial development of the vast hydrocarbons reserves of the Perla field.

Located in the Cardon IV block in the Gulf of Venezuela, the Perla field - Venezuela's largest gas discovery - is estimated to contain approximately 17 trillion cubic feet (Tcf) or 3.1 billion barrels of oil equivalent. Eni and Repsol are joint operators of the Perla field. As part of the Gas Sales Agreement, PDVSA will participate with a 35% stake in the consortium during the development phase. This implies that Eni and Repsol's holding will get reduced to 32.5% each.

The Gas Sales Agreement signed by PVDSA is valid until 2036 and is expected to yield approximately 8.7 Tcf or 1.6 billion barrels of oil equivalent. This will help in fulfilling the domestic gas demand in Venezuela which is expected to grow along with industrial, petrochemical and power generation consumption in the coming years.

The execution of the Agreement would be followed by a Final Investment Decision ("FID") for Phase I. FID takes into account the utilization of the wells already drilled and the setting up of light offshore platforms connected through a gas pipeline to a Central Processing Facility ("CPF") located onshore. Cost for Phase I is estimated at $1.4 billion.

Phase II and III will entail further drilling from the platforms installed during Phase I, and the expansion of the CPF processing capacity.

The massive size of the field holds immense potential for development of natural gas exports. Preliminary studies have been carried out by the partners to verify the feasibility of export options and countries of destination.

Eni holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the stock. The company faces competitive threats from Total SA ( TOT ) and Chevron Corporation ( CVX ).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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