Reuters

Monday, August 25, 2008

CAPE TOWN — Venezuelan President Hugo Chavez is expected to sign a bilateral energy agreement with South Africa next week paving the way for state-owned oil company PetroSA to acquire an oil-producing asset in Venezuela.

PetroSA has held high-level discussions with its Venezuelan counterpart, Petroleos de Venezuela SA, on projects including oil exploration and the production of heavy crude oil in the Orinoco belt of Venezuela.

Everton September, vice-president of PetroSA's new ventures unit, told Reuters on Monday Mr. Chavez's signature was needed to formalize a memorandum of understanding.

“The MOU will come into effect immediately upon signature. PetroSA would like to acquire an oil producing asset in Venezuela [and] receive a direct crude allocation from PDVSA in the short term, between six months and one year,” Mr. September said via email.

“In the medium term (between one and two years), offshore natural gas opportunities [and] opportunities that commercialize our GTL technology and LNG opportunities will be investigated.”

PetroSA operates one of the world's largest gas-to-liquids (GTL) refineries at Mossel Bay on the southern coast of South Africa, and is actively pursuing oil exploration in Equatorial Guinea, Gabon and Egypt.

Mr. September said no projects had been identified yet and it was premature to speculate on the size of the Venezuelan investment or proposed output volumes.

He told Reuters previously that the deal with Latin America's biggest oil company may be worth hundreds of millions of dollars.

Mr. September said on Monday oil from Venezuela could be earmarked for PetroSA's new $7-billion (U.S.) Coega refinery project, which would produce 250,000 barrels per day.

The refinery, expected to come on stream by 2015, would position PetroSA to export oil throughout southern Africa.

Venezuela is currently South Africa's third largest trading partner within the Andean Community, with total trade between the two countries valued at 896-million rand ($116-million) in 2007.

South Africa's imports are now dominated by petroleum oil, which accounted for 90 per ent of total imports from Venezuela in 2007, figures from the Department of Trade and Industry show.

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