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Venezuelan gas plans hit by rig sinking

Venezuela's PdV found itself briefly in the spotlight when a contracted drilling rig sank in the Gulf of Paria

WITH THE world focused on BP's oil spill in the Gulf of Mexico, Venezuela's PdV found itself briefly in the spotlight when a contracted drilling rig sank in the Gulf of Paria. Union leaders and critics of Venezuelan President Hugo Chávez seized on the sinking as yet another sign of incompetence at state-owned PdV, a charge rejected by the government.

The sinking of the Aban Pearl semisubmersible, which was drilling for gas in the northeastern Gulf of Paria, also battered its owner, Indian drilling group Aban Offshore, as investors fretted over the company's future following the loss of one of its biggest assets. Questions about the condition of the rig, built in 1977, persist.

The Aban Pearl has had a troubled history in recent months. The vessel listed and was at risk off sinking of Trinidad and Tobago in August after its floatation system failed. With the help of the Trinidad Coast Guard the rig was eventually stabilised and delivered to PdV, where it began drilling the Dragon-6 non-associated gas well, north of Venezuela's Paria peninsula. PdV has not yet determined the cause of the accident, but the crew was able to shut down the Dragon-6 well, which was about to undergo testing, before abandoning the platform.

The sinking is a blow to Aban, which had contracted the rig to PdV through 2015 on a day-rate of $358,000, its richest single contract. Shareholders slashed a fifth off the company's value, which was already under pressure because of its large exposure to the soft jack-up drilling-rig market. Aban's board approved a $400m issue of convertible bonds at the end of May to shore up its finances.

In the longer term, the sinking could prove troublesome for Venezuela's gas-development plans. PdV is counting on the Dragon and three other gasfields in the area, near the maritime border with Trinidad and Tobago, to supply under-construction power plants to tackle domestic electricity shortages. The fields are also needed to meet increased energy demand from heavy-oil projects in the Orinoco belt. And production has been earmarked to supply the country's on-again off-again Mariscal Sucre liquefied natural gas export project.

But Venezuelan officials insist the loss of the rig will not slow the gas-production schedule from the area – from which PdV expects to pump up to 2.45bn cubic feet a day by 2012. The Neptune Discoverer drillship, which was already operating in the area, will continue development work, PdV says. But all has not been well with that project either. A contract dispute between the Neptune Group and PdV was resolved after Neptune sold the drillship to privately held PetroSaudi International for $150m in January, which assumed the four-year, 21-well contract. And PdV may struggle to secure another rig given its cash troubles and seeming determination to wean itself from a reliance on Western contractors.

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