Shell has been in Venezuela for long time. Many companies, such as Shell, are attracted by the energy sector. Could you briefly tell us about the background of Shell's operations in this country?
Shell has been present in the Venezuelan market for much longer than you can imagine. In 1914, we began exploration through the Caribbean Petroleum Company. In a long run we think Venezuela is one of the countries and regions with a high term potential growth and development. The first successful drilling occurred in the state of Zulia. This was almost a flagship project - it quickly became the first commercial well. A year later over 100 oil wells had been discovered in Venezuela. We knew the potential was high. By the mid 1970s, Shell Venezuela was producing over 1 million barrels of crude oil a day. Apart from oil, Shell has moved and diversified into the gas sector and the area of lubricants. Venezuela hopes to attract billions of dollars for investments since this sector opened for private companies in 1999. Throughout the nationalization of the oil sector Shell maintained a heavy presence in the Venezuelan economy focusing on the chemical sector, agro-chemicals, and en-masse consumer products. Once the oil sector opened up, Shell's long-term vision materialised with participations in exploration, production, combustible distribution as well as producing and distributing the highest quality lubricants in the world.
What are the major projects that Shell has been involved in?
In 1993, we signed the Urdaneta West (UDW) Operating Services Agreement (OSA). Located in the Northwest section of Lake Maracaibo, this agreement allowed us to operate wells and to develop the area for 20 years .We began commercializing lubricants in 1996. By installing our lubricants plant in Valencia, the most modern in Latin America, we demonstrated our commitment to Venezuela. The plant was built in a record time with an initial investment of $9.5 million. We can now rely on 37 national distributors that are strategically situated to cater various market segments.
We also started a joint venture with Texaco to manufacture and package the lubricants. This project will be completed by Shell's plant in Valencia, in the state of Carabobo The plant has a quality control rating: ISO9002. One of the advantages of the alliance is that both companies can distribute products more efficiently and competitively. At the end, we benefit and the costumers are happy.
As far as gas is concerned, we signed an agreement in December 2000 with PDVSA gas, Esso and Mitsubishi for the study and investigation of the LNG (Liquified Natural Gas) project. Included in the project will be a train that will enable the production of 4 million square tons a year beginning in 2005, this will also generate employment for over 800 people. The project is divided by Shell, 30%, PDVSA Gas with 33%, Esso,29% and Mitsubishi with 8%. The main goal of this project is to export Liquid Natural Gas to the United States and to the Caribbean. We believe that the future plant will create more room for growth. This will enable us to look up towards the rest of the continent.
How strategic do you see the position of your projects ?
We see a long-term approach towards the South American and North American markets. Venezuela is ideally located for our strategy. One obvious market that we forsee is Brazil and also the Iberian Peninsula. Our venture into Liquified Natural Gas will be heavily focused on the technology of liquifying.
| What does this imply in terms of investment?
Up to now we have invested somewhere in the region of 1 billion Dollars. Since our early projects in the Urdanta Oeste, we moved into lubricants; service stations have also continued to appear throughout the country. We hope to end-up the year 2001 with about 200 service stations nationwide. Apart from the petrol area, we see that diversifying our products will create interesting market niches.
What are your expectations as far as the development of gas is concerned?
We are naturally confident and optimistic about the future of the gas sector in this country. There are various phases in this project. In Sucre, our work will generate employment and transform the area.
What measures have you taken to protect the environment?
It has been one of our benchmarks to lobby and to communicate to the world the work we conduct, as well as what our strategy for the future is. We have heavily used the media to create awareness on our ethics. Shell has a very high and visible voice on long-term sustainable development. By having a clear strategy, we have indirectly influenced the general public as well as the areas we operate from. Some of our potential projects in gas have boosted the investor's confidence. In the event that we continue to expand, using LNG project as an example, we can only gain and that is good for Venezuela.
You seem to be a strong advocator of the energy sector in Venezuela?
Very much so! All our projects are based on the notion that with a solid investment and hard work we can create long term successful operations. We see the strategic advantages for the economy and the ability to move into potential markets as I mentioned before.
How does this affect the image of Shell in Venezuela?
Our image is a very good one: we believe in the promotion of the company. Advertising is one area that we have always used as a tool. Image is essential in today's global economy, especially in the energy sector where we constantly have to adhere to new regulations and innovations in order to work well without creating any harm. Our projects are long term so we are careful to watch over every angle and image and the communication of our image are vital to our identity.
What is your vision of the country as an investment destination?
This country has an amazing potential. For the moment the main sector to have been developed is the energy one. But there are many opportunities in telecommunications and in tourism. We believe that with an economy that moves up and down, the best approach is to develop long-term strategies. Many companies have the same mission. The country is beautiful, the people are very friendly and the opportinity to invest is boundless. |
