Total to expand activities in Venezuela through three new

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9th March 2005

Hugo Chávez Frías, President of the Bolivarian Republic of Venezuela, authorized the expansion of Total's activities in his country, including the undertaking of the Sincor II Project, the extension of the Yucal-Placer gas field, and the company's future participation as joint operator of Block 4 in offshore Deltana Shelf, together with Statoil, the Norwegian national oil company.

A major French oil company, Total operates under the Jusepín Agreement, in the eastern State of Monagas, where it currently produces 38,000 barrels of crude per day. It also has a 47% share in the SINCOR partnership, which produces 200,000 barrels per day of extra-heavy crude and converts it into 170,000 barrels per day of light synthetic crude. From the Yucal-Placer field, in the State of Guárico, it produces 90 million cubic feet of natural gas per day.

“We have given them the green light, so that in a week their negotiating team can sit down with PDVSA and the Ministry of Energy and Petroleum to work out what will become the Sincor II Project”. President Chávez described the meeting with Desmarest as being highly positive, remarking “today, in Paris, Sincor II has was born”.

“With Venezuelan technology and allied companies such as Total, we are pumping out heavy and extra-heavy crude from the Orinoco Belt, transporting it to the terminal at Jose, and converting it into what we call a nectar, oil worth gold, and which sells anywhere in the world as synthetic crude”, President Chávez said. He added that Total would invest additional funds in Phase II of the Yucal-Placer Project for the purpose of doubling natural gas production from this area. The Venezuelan President furthermore stated that “ we have also given the green light so that Total, together with Norway's Statoil, can jointly operate Block 4 of the Deltana Shelf. In this way, they can shortly begin to drill the first well”.

Mr. Chávez also said that Total “is ready to take a leap forward and double the production achieved over the past few years, committing new investment, technology and, something very important, they have understood perfectly –as have other oil companies- the new Venezuelan legislation, the Constitution and the Hydrocarbons Law, with a new royalty scale and income tax”.

On the latter point he said that, “in a recent visit to Venezuela, Mr. Desmarest handed in a letter to the Government in which Total accepted the conditions established by the new Venezuelan laws. This is important because we are recovering our oil sovereignty, increasing fiscal income so that we can redistribute it among the poor through health, housing, education and credit plans”

As royalty for Sincor I, Total is currently paying in 16. 2/3% after President Chávez, is part of the Full Oil Sovereignty Plan, increased it from the original 1% rate. In the case of Sincor II, the French company will pay a 30% royalty, as established in the Organic Law on Hydrocarbons.

“They would also like to join in the Gran Mariscal de Ayacucho Industrial Complex Project (Cigma), one of the largest in America for gas processing and liquefaction”, he added.

He closed by remarking that “France is one of the leading investors in Venezuela, our country being ranked third among the prime destinations for French investment, after Argentina and Brazil”


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