Venezuela Selects Companies To Develop Offshore Gas - Report

Venezuelan officials have chosen a group of foreign companies to develop the country's offshore natural gas project Mariscal Sucre, Reuters reported Tuesday, citing unnamed sources.

Among the companies picked for the project are Malaysia's Petroliam Nasional Bhd, or Petronas; China's CNOOC Ltd. (CEO); Algeria's Sonatrach; and a Russian consortium that includes OAO Rosneft (ROSN.RS), Surgutneftegaz JSC (SGTZY), TNK-BP Holdings (TNBP.RS), Lukoil Holdings (LUKOY) and Gazprom Neft (GZPFY), Reuters said.

For nearly a decade, Venezuela has been seeking to exploit its offshore natural gas reserves, which are among the largest deposits in the world. But so far it hasn't produced anything. The Mariscal Sucre project is estimated to hold around 14.7 trillion cubic feet of gas.

Venezuela produces plenty of onshore natural gas, but the petroleum industry consumes 70% of it, mostly in the form of reinjection to aid crude oil extraction.

President Hugo Chavez has been pushing for more natural gas production, both onshore and off, and aims to increase the use of natural gas-driven cars and trucks to reduce dependency on gasoline.

Officials this week said they spend nearly $1.5 billion a year on subsidizing domestic gasoline prices, which at just more than 10 cents per gallon rank near the cheapest in the world.

Venezuela is looking to decrease domestic consumption of gasoline by 100,000 barrels a day this year.

-By Kejal Vyas, Dow Jones Newswires; 58-414-249-6821; [e-mail]