Source AP ©

Petrobras refuses to participate in Mariscal Sucre natural gas project in Venezuela

Brazil's oil company is not going to take part in the Mariscal Sucre natural gas project in Venezuela.

Petrobras Chief Executive Sergio Gabrielli decided the project was not advantageous to the company, said a press officer for Petroleo Brasileiro SA who declined to be identified, in accordance with company policy.

"Petrobras withdrew for technical and economic reasons," the press officer said.

Petrobras and Venezuela's state oil company, Petroleos de Venezuela SA, or PdVSA, had planned to jointly develop Mariscal Sucre project, which Petrobras said was slated to cost between $2.5 billion (1.7 billion EUR) and $3 billion (2 billion EUR). But the two companies never signed a binding agreement.

Petrobras International Director Nestor Cervero said in September that Petrobras and PdVSA had "different ideas about the destination of gas sales."

Brazilian company favored selling most gas from Mariscal Sucre as liquefied natural gas. But PdVSA wanted to sell natural gas on its domestic market - where it likely would fetch a far lower price than LNG sold on international markets.

The pullout from Mariscal Sucre is not related to Petrobras' announcement last week that its ultra-deep Tupi field in Brazil's Santos Basin contains up to 8 billion barrels of oil equivalent in oil and gas, the press officer said.

PdVSA had said it expects production from Mariscal Sucre to start in late 2010, but Petrobras director Cervero said in September it would be difficult to reach that target.

Output from Mariscal Sucre initially should be about 18 million cubic meters of gas a day, Petrobras has said.

Petrobras and PdVSA still plan to jointly build a heavy oil refinery in northeastern Brazil. PdVSA is slated to have a 40 percent stake in the refinery, Petrobras Chief Financial Officer Almir Barbassa said in a conference call Tuesday.

Petrobras began groundwork on the 200,000-barrel-a-day refinery in September, although the company and PdVSA haven't signed any firm deal it.

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