PDVSA

GROWTH & CONSOLIDATION IN LATIN AMERICAS ENERGY INDUSTRY

1

March, 2000

PDVSA

Proven Reserves (TCF) Non Associated Gas

VENEZUELA
MEXICO ARGENTINA TRINIDAD & TOBAGO BRASIL COLOMBIA BOLIVIA ECUADOR
8,0 6,9 4,3 3,7 24,1 18,3 14 63,5

146

Seventh in the World Seventh in the World

30 45 60 75 90 105 120 135 150
March, 2000

0
2

15

PDVSA

Gas Resources (TCF)

Associated Non-associated Associated Non associated

Proved =146 Probable Possible Undiscovered

3

132 32 32
Onshore: Offshore:

14 7 11 6-20 40-60
March, 2000

PDVSA

BCFD
Injection

(%)
47

Current Production/Consumption 1999 (%)

Oil Industry 32
Domestic Market Power Gen.

73 %
Internal Use NGL Others Refinery

27%

32 9 8 4
Residential

21 21 6 5 15

Petrochemical

Steel/Alum. Cement Others

Oil Industry

4.2
4

Total = 5.7

Domestic Market

1.5
March, 2000

PDVSA

Current Production / Consumption NGL & Methane (%) (%)

Exports

32
34 18 16

25 24

Power Gen.

Manufacture

Oil Industry

22
Domestic Market Petrochemical

Petrochemical Steel/Alum Oil Industry

17 12

NGL 181 MBPD

5

Methane 1.5 BCFD

March, 2000

PDVSA

Forecast (1999 - 2009)

2.000 1.600

Energy Matrix 1.1

(42 %) (26 %) (32 %)
2000 2001 2002

1.8
(55 %) (17 %) (28 %)
2007 2008 2009

MMBOED 1.200
800 400 0

Natural Gas
Liquids Hydroelectric power
2003 2004 2005 2006

1999

BCFD

5 4 3 2 1 0
1999

Natural Gas
MANUFACTURE

4.2
STEEL / ALUMINUM PETROCHEMICAL POWER GENERATION

1.5

2001

2003

2005

2007

2009
March, 2000

PDVSA

Energy Policy

Economic Growth Economic Growth

Increase Gas Supply Expand markets - Domestic - International Facilitate Private participation - E&P - T&D - Transformation & Industrialization
7

March, 2000

PDVSA

Legal Framework

Gas Law
Private participation in non associated gas E&P

and all gas downstream activities 20% royalty Creation of a National Gas Regulatory Board Regulation in T&D, Tariffs Vertical Disintegration

Income Tax Law

E&P Income tax rate reduced from 67% to 34% Tax credit on new investments (10%)

Price
Commodity Price

.... Reasonable profitability

Gas Price =

Transportation Tariff

Distribution Tariff
March, 2000

PDVSA

Business Opportunities Upstream Exploration / Production

Gathering

Midstream

Business Portfolio

Existing Trans. Systems Expansion New Transmission Systems

Downstream
Distribution Processing Industrialization/Transformation Power Generation Exports
9

March, 2000

PDVSA

E&P Strategy
Volume Demand
Domestic market Oil industry Export

Supply

PDVSA own effort (Associated Gas)

Time

yOpportunity

in potential demand yNeed to add flexibility to the supply system

10

E&P Licenses for Non Associated Gas

March, 2000

PDVSA

E&P Strategy

OFFSHORE - INTEGRATED PROJECTS - DIRECT NEGOTIATIONS - EXPORTS

MARACAIBO BARQUISIMETO JOSE
SAN CARLOS

ANACO

GUANARE

ONSHORE

BARINAS

- BIDDING OF 10 BLOCKS - TERMS AND CONDITIONS IN PROGRESS - FORMAL PUBLIC ANOUNCEMENT AND DATA
11 PACKAGES

ANACO PDVSA OWN EFFORT

2nd Q/ 2000

March, 2000

PDVSA

Expansion of Existing Transmission Systems Spin off / Joint Venture

PDVSA GAS 49% or Lower Ul -Ul Amuay Amuay Selected Partners 51% or Higher Anaco --Jose -Anaco Jose PLC PLC
Pto. La Cruz Barquisimeto Anaco

Anaco -Anaco Barquisimeto Barquisimeto Anaco --Pto. Anaco Pto. Ordaz Ordaz
12

Pto. Ordaz
March, 2000

PDVSA

New Transmission Systems Construction & Operation Foster 100% Private Capital
Central --West Central West Interconnectio Interconnectio n n

Transport Service Contract Gas pipeline Gas pipeline to to Margarita Margarita

Pto. La Cruz Barquisimeto Anaco

Gas pipeline to Gas pipeline to Acarigua Acarigua

13

Pto. Ordaz
March, 2000

PDVSA

Gas Distribution Development

Bidding conditions:
Economic Feasibility Ample Markets Economies of scale Distribution Tariff Plan to increase number of users Recognized Operators Domestic Capital Usage

14

March, 2000

PDVSA

Hemispherical Integration
Atlantic Basin LNG Market: 3.9 BCFD
Spain/Portugal US US East Coast US Gulf Coast Central America Caribbean Caribbean Puerto Rico Northeast Brasil
GAS

LNG 2 Projects, 6 MTY

GTL FEASIBILITY STUDY

NGL 200

370 TBD

PIPELINE UNDER EVALUATION

15

46% EXPORT POWER: 60- 200 MW 3er Q., 2000

March, 2000

PDVSA

Venezuelan Strengths Vast resources Strong support from local suppliers Long history of oil and gas production Strategic geographic location

Excellent opportunity to Excellent opportunity to support major gas support major gas developments developments Key Player Energy Supplier
16

March, 2000

PDVSA

Summary

In the mid term, Gas business in Venezuela will reach its maximum development potential, based on: New National Energy Policy Excellent Base of Resources Private Investors Potencial New Markets NGL Methane Investment: 7 bn$
17

Domestic Export

March, 2000